Toyota Offers Very Public Remorse for Financial Results

And just about everything else…

By Brendan Moore

10.02.2009

Toyota logo-smallA contrite and embarrassed Akio Toyoda, president of Toyota and grandson of the company’s founder, offered up a surprising and sobering assessment of Toyota’s current problems and its future prospects this morning in Tokyo.

In a somewhat rambling briefing given to reporters at the Japanese Press Club, the 53 year-old Toyoda gave a decidedly downbeat overview of Toyota.

“Toyota”, he stated, is “grasping for salvation”. Immediately before that statement, Toyoda had claimed that Toyota was wholly unprepared for the current economic free-fall, and now is a single step away from “capitulation to irrelevance or death”.

Toyoda’s remarks are somewhat puzzling given that Toyota is in far, far better financial shape than most other auto manufacturers. The company expects a $5 billion USD loss for the fiscal year that will end in March, but has a good product line-up, ample cash reserves, healthy lines of credit, and, is well-positioned to prosper when the global economic crunch finally ends.

But that wasn’t all that was on Toyoda’s mind this morning. The curious self-contrition didn’t end there.

In short order, Toyoda apologized for the loss of four lives when a Lexus crashed recently in Arizona, probably when a factory floor mat got jammed with the accelerator. Toyota is almost certainly facing a US recall of 3.8 million cars as a result, which would be the largest recall ever of Toyota vehicles.

Toyoda apologized for the size of Toyota, saying the company had grown too large. He apologized for the drop in quality of Toyota vehicles. He apologized to the people of California for closing the NUMMI plant there. He apologized to young people in Japan and elsewhere for not making more interesting cars. He apologized to the tax authorities in Japan for paying less taxes since Toyota is making less money now. He apologized for having to lay off temporary workers in Japan.

He stated that Toyota would welcome an extension of Japan’s version of Cash For Clunkers, which has sharply driven up sales of the Prius, and then apologized, more or less, for bringing up the subject of government aid to carmakers.

Toyoda, in an oblique way, even apologized for the yen being so strong against the US dollar lately, which, as far as we know,  is not within Toyota’s power to determine.

Mr. Toyoda alluded to the book, How the Mighty Fall, by Jim Collins, when talking about Toyota’s current difficulties today, and seems preoccupied with the five stages of corporate decline delineated in the book. Stage four, according to the book, is, “grasping for salvation”, the term Toyoda used to describe Toyota’s current state.

Japan’s culture honors the act of apology, but even people in Japan seem to have been taken aback by the amount of self-flagellation Toyoda displayed this morning.

Perhaps it was his way of issuing a wake-up call to the troops at Toyota; perhaps it was spontaneous and genuine, or, perhaps some combination of both.

Near the end of the briefing, Toyoda said the 72-year old auto manufacturing company will “need to groom young people to be making cars for the next 100 years. The salvation for the company isn’t me.”

COPYRIGHT Autosavant – All Rights Reserved

Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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9 Comments

  1. Even given the societal norms in Japan, this amount of apology seems excessive. It’s probably a reflection of Toyoda’s personality, which doesn’t look strong enough to be the leader of a major global automaker like Toyota.

  2. Can you imagine anything close to this sort of mea culpa from the head of GM?

    And they definitely owe us some apologies from the last few decades. Major, major apologies.

  3. I think Toyoda is a little nervous that the family company is starting to parallel GM’s rise and fall a little too closely – and perhaps on a faster timeline. In Toyota’s favor is the fact that its leadership has recognized the problem. If they can deal with it before they get to the point that GM and Chrysler got to, maybe they’ll be able to reverse the problem successfully.

  4. Luke-

    I agree, he is going to be made of sterner stuff if he’s going to lead Toyota through it’s current problems.

    Sort of reminds me of Bill Ford when he led Ford Motor Co.

  5. I applaud his honesty. The difference between Toyota and an American car company is that they will admit their mistakes honestly and a year later, those mistakes will be fixed.

    Not ignored. Not denied.

  6. Strangely on Jalopnik, someone mentionned when someone decide to apologize after all these years, it’s a sign of weakness, I guess we have to wait and see.

    As Troy mentionned, if it was GM who did this sort of apologies. I guess the media will act with uproar like the big bully in school who kick the guy who fall on the floor and continue to kick even if he falled. But if it’s Toyota or even Honda, the media decide to close their eyes…. It’s a bit tempted to think of a sort of “positive discrimination” (ducks to avoid some rocks and some flames ^^;;)

    On the other hand, I wonder if Akio Toyoda might hope then Toyota lost the #1 position asap now then he discovered then being #1 is like some super-hero who discovered then with great powers came great responsabilities and losing the #1 rank might probably be a blessing in disguise?

  7. Words are fine, but they’re just words. Assuming Toyoda is able (or willing) to turn Toyota around before it heads down the failure road paved by GM just because he apologizes profusely is naive.

  8. Very strange. Maybe it’s a Japanese thing.

  9. Haha ha ha ha haha ha ha.

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