Toyota to scrap full product lineup until return to profit: Toyoda

TOKYO, Jun 25, 2009 (Kyodo News International - McClatchy-Tribune Information Services via COMTEX) -- TM | Quote | Chart | News | PowerRating -- Toyota Motor Corp.'s new president Akio Toyoda, a member of the founding family, said Thursday that the automaker will abandon for now its cornerstone policy of offering a full product lineup and focus more on local market needs to return to profitability.

Toyoda also said the company, which is anticipating a second straight year of deep losses, will aim to return to the black by the year ending in March 2011.

"This is really a start from rock bottom," Toyoda said at his first press conference since taking over the top post on Tuesday.

"We will determine the areas where we need to push forward and the areas where we need to withdraw," he said without elaborating.

Immediately after his appointment, Toyoda assigned four of Toyota's five executive vice presidents to take charge of specific regions including Europe, North America, Japan and emerging countries.

"We built our product strategy on offering a full lineup in all regions," he said. "We would like to continue, but we have to wait on that in view of our current strength and capability." Toyoda suggested that he intends to shift from the aggressive expansion policies of his predecessors. Part of that shift involves reconsidering the company's strategy of offering a rich lineup of products in different sizes in all markets under the Toyota group, which includes minicar maker Daihatsu Motor Co. and truck maker Hino Motors Ltd.

"It was certainly not wrong to expand our business in order to meet the needs of our global customers," Toyoda said. "But by overstretching we were not able to employ Toyota's strength." Toyoda, the grandson of company founder Kiichiro Toyoda, was groomed early for the top job after entering the firm in 1984, but he faces the formidable challenge of guiding the world's biggest automaker out of a once-in-a-century crisis in the global auto industry.

Toyota tapped a Toyoda family member for the first time in 14 years after it fell into the red in the year ended March with a group net loss of 436.9 billion yen, a turnaround from a record-high profit of 1.72 trillion yen in the previous year.

The company is anticipating a staggering operating loss of 850 billion yen for the current business year after recording its first loss in 71 years in fiscal 2008.

"Tough conditions are likely to continue for the next two years," Toyoda said.

"We will take every possible measure" to avoid sinking into the red for three consecutive years through March 2011, he added.

Toyoda also said he will return 30 percent of his monthly salary for a year from July to take responsibility for the company's dismal performance.

But while many industry observers saw Toyoda's organizational change as a cue for a departure from a U.S.-focused policy, he emphasized that the North American region will continue to be a key market that will form "the pillar of Toyota's overseas strategy." But he added, "There will be changes to the market structure, which formerly focused on large-sized cars." On the domestic market, Toyoda said the company is studying establishing a new marketing company to better meet local customer needs.

Toyoda said he will continue to put resources into expanding the lineup of eco-friendly cars, focusing particularly on gasoline-electric hybrids which have provided a rare bright spot for Toyota.

The new, lower-priced Prius hybrid, which debuted in Japan in mid-May, has already received domestic orders for 200,000 units, surpassing last week's announcement of orders totaling 180,000 units.

Yasuaki Iwamoto, an auto analyst at Okasan Securities Co. who attended the press conference, said Toyoda failed to provide specifics but added that the general direction to create a leaner company was positive for Toyota's future.

"I wanted to hear more about how he is going to speed up the pace of reform and what kind of priorities he has," Iwamoto said.

"But in a way, it was fresh to hear about withdrawal, a word Toyota has not used before," he said.

In vowing to bring the struggling automaker back to a healthy state, Toyoda often turned to the philosophy of his founding family, which emphasizes manufacturing cars in a way that makes a contribution to society.

But even Toyoda admitted his roots will not make the daunting tasks ahead easier.

"I had no choice in being born with Toyoda as a surname. I will reconfirm and boldly carry out what needs to be done and what I believe in," he said.

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