Posted on: Sunday, May 23, 2004

Toyota's success taking on global proportions

By Yuri Kageyama
Associated Press

TOKYO — With video games, baby strollers and manicure kits to welcome visitors, dealers at a Toyota showroom in suburban Tokyo are working to convince buyers that today's models have nothing to do with their parents' boring old cars.

"We try to create a warm feeling especially to appeal to young women so they feel they can drop by casually," said Hiroshi Ishizawa at the dealership, which also holds costume parties and raffles with DVD recorders for prizes to win customers.

Such efforts by Toyota dealers have paid off in Japan and around the world.

The Japanese automaker this month marked its second straight year of record profits, earning $10 billion for the 12 months ended March 31, up 55 percent from the previous year. Sales boomed in all key regions — the United States, Europe and Asia.

Last year, Toyota surpassed Ford Motor Co. of the United States to emerge as the world's second largest automaker after General Motors Corp. in terms of vehicles sales.

"The results drive home what an awesome company Toyota has become," said Kunihiko Shiohara, an analyst at Goldman Sachs in Tokyo.

Toyota has freshened up its image in North America as well. Having scored big success with baby boomers around the world with its reputation for good mileage and durable quality, Toyota is determined to extend its appeal to boomers' children.

Toyota began a marketing campaign last summer in California called Scion to revamp its image by linking video-game contests, hip-hop CDs and underground film showings with two low-end car models targeting youngsters.

The campaign will expand to the entire United States next month with a third model. Although Scion sales at 29,000 so far are minuscule compared to the 410,000 U.S. 2003 sales for the Camry, the nation's best-selling car, numbers are picking up.

"If you get people to buy your brand as their first car, chances are good they'll keep coming back," said Shinji Kitayama, analyst with Shinko Securities in Tokyo. "Toyota is moving quickly to deal with that."

For fiscal 2003, Toyota sales in North America reached 2.1 million vehicles, an increase of 121,000 over the previous year.

Toyota, which opened a state-of-the art design center in Japan last year, is strengthening its car design to take advantage of the futuristic image associated with things Japanese — a flair Toyota designers call the "J-factor."

"For 20 years, we've been trying to catch up with other automakers. Perhaps we have entered the stage that we must begin to develop our own style of products," Toyota president Fujio Cho told The Associated Press recently. "Being a good member of the international community is tantamount to being a good Japanese."

For years, more than half of Toyota's profits came from North America. But the latest results show Toyota sales are also strong in other regions such as Europe, the Middle East and southeast Asia.

Toyota now controls about 11 percent of the global market. It appears headed toward its goal of clinching 15 percent — roughly the same share as General Motors today — before 2020.

Toyota is doing so well the only danger may be keeping up with its own growth.