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Thursday, Feb. 10, 2011

ANALYSIS

Vindication for Toyota, but lots of ground to make up


Staff writer

The U.S. Transportation Department's final report on Toyota Motor Corp.'s sudden acceleration cases may be a relief to Toyota but experts say it won't be easy for the world's No. 1 automaker to regain lost ground in the United States amid intensifying competition.

The department announced Tuesday in Washington that its investigation — assisted by NASA engineers — resulted in the finding of no electronic flaws to account for reports of unintended acceleration and other safety problems.

"Toyota avoided the worst possible scenario," said Yasuo Tsuchiya, an expert on the automobile industry and vice chairman of the nonprofit Japan Think Tank Academy.

If any fault had been found in the electronic throttle, the impact would have meant serious repercussions for the entire industry, since each car produced by the automaker has at least 50 to 100 microcomputers produced by companies that Toyota has no direct control over.

The news provided Toyota with a reprieve from the long-running accusations of faulty electronics.

"Toyota will listen tocustomers' voices more than ever, and make utmost efforts to produce safe vehicles that customers feel comfortable with," said corporate spokeswoman Mieko Iwasaki.

While the release of the final report of the 10-month investigation was positive news, experts expect Toyota to face a tough road ahead.

Even if no electronic cause was found, Toyota's name has not been cleared, said Takaki Nakanishi, an auto analyst at Alliance Bernstein Japan Ltd., adding that certain defects were found in some cars' pedals and floor mats. The defects were fixed in later recalls.

Nakanishi said Toyota's competitiveness in the U.S. market is weakening not only due to its massive recalls, but also because of the automaker's inability to develop attractive new models.

Last year, Toyota's sales in North America dropped 2 percent from 2009 to a total of 1.94 million vehicles. It was the only major automaker to see its North American sales drop.

In the U.S. alone, while General Motors Co.'s sales grew 6.3 percent to 2.21 million units and Ford Motor Co. jumped 19 percent to 1.93 million, Toyota sold 1.76 million vehicles, about the same level as a year earlier.

But Toyota maintains things are gradually rebounding.

"Our sales in the North American market started to recover in October," Toyota Senior Managing Director Takahiko Ijichi said at a news conference on its third-quarter earnings Tuesday in Tokyo. "We expect 1.9 million units or maybe more this year in the U.S. market, compared with 1.76 million units last year."

Experts say Toyota needs to compete in a drastically changing battlefield.

Tsuchiya of Japan Think Tank pointed out that the competition in the U.S. is fiercer than before, with GM and Ford quickly recovering and Hyundai Motor Co. chasing those titans.

What's more, Toyota, like many other carmakers, must also shift its sales focus to China and other emerging markets — all the while defending its position in the U.S. market, he said.

Meanwhile, experts say it will take time for Toyota to see its share of the U.S. market return to previous levels.

Toyota's current share in the U.S. is about 15 percent, compared with 17 to 18 percent at the time of its peak.

Nakanishi believes Toyota can regain its share gradually, to around 16 percent, but will not be able to return to peak sales without improving its ability to develop attractive new cars.

"GM and Ford used to sell SUVs (sports utility vehicles) and large vehicles well in the U.S., but now they successfully develop compact and fuel-efficient cars (that Toyota used to overwhelm other makers with)," Tsuchiya said.

"Even if Toyota restores its reputation, it doesn't mean that everything will be fine," he said. "The competition map has changed."


Related links

Toyota dealers feel vindicated by probe

By TAKAHIRO FUKADA and MIZUHO AOKI


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