Introduction

Toyota Motor Corporation (Japanese: トヨタ自動車株式会社, Toyota Jidōsha

Kabushiki-gaisha?, TYO: 7203), commonly known simply as Toyota, is a multinational

corporation headquartered in Japan. At its peak, Toyota employed approximately

320,000 people worldwide. It is the world's largest automaker by sales.

The company was founded by Kiichiro Toyoda in 1937 as a spinoff from his

father's company Toyota Industries to create automobiles. Three years earlier, in 1934,

while still a department of Toyota Industries, it created its first product, the Type A

engine, and, in 1936, its first passenger car, the Toyota AA. Toyota also owns and

operates Lexus and Scion brands and has a majority shareholding stake in Daihatsu

and Hino Motors, and minority shareholdings in Fuji Heavy Industries, Isuzu Motors,

Yamaha Motors, and Mitsubishi Aircraft Corporation. The company includes 522

subsidiaries.

Toyota is headquartered in Toyota City, Aichi and in Tokyo. In addition to manufacturing

automobiles, Toyota provides financial services through its division Toyota Financial

Services and also builds robots. Toyota Motor Corporation (including Toyota Financial

Services) and Toyota Industries form the bulk of the Toyota Group, one of the largest

conglomerates in the world.

But recently Toyota Motor face a very big problem. In January 2010, Toyota

announced recalling up to 1.8 million cars across Europe, including about 220,000 in

the UK, following an accelerator problem.] The US Transportation Department has

opened an investigation into brake problems in Toyota vehicles. This is after the

department received 124 reports from drivers about the issue, including four involving

crashes.

The company said its recall could cost the company up to US$2 billion (GB£1.25 billion)

in lost output and sales. Toyota later recalled the Prius model after problems were

found in the ABS system. Many Toyota models were involved, covering 2007-2010

model years. The U.S. Sales Chief, James Lentz, was questioned by the United States

Congress committees on Oversight and Investigations on February 23, 2010, as a

result of recent recalls.

In 2008, Toyota achieved its long-held goal of becoming the No. 1 carmaker in

the world, passing General Motors, which had been the leader since 1931. Shortly after

Toyota gained that distinction, global auto sales plunged, leading to a loss for the fiscal

year of $4.8 billion, the largest in the company's 72-year history.

In late 2009, Toyota returned to the black. But its reputation for safety and quality — key

elements in its success — took a battering. A series of recalls in recent years was

capped by announcements in November 2009 and January 2010 that the automaker

would recall more than eight million cars globally to resolve a widespread problem with

unintended acceleration.

The automaker also said in January that it would temporarily stop building and

selling eight models in the North American market. On its Web site, Toyota said the

years and models affected in the sales suspension were the 2009-2010 RAV4
crossover, the 2009-2010 Corolla, the 2009-2010 Matrix, the 2005-2010 Avalon, the

2007-2010 Camry, the 2010 Highlander, the 2007-2010 Tundra, and the 2008-2010

Sequoia. Toyota said the move was intended to restore confidence in the automaker,

and the safety of its products. Of the eight million vehicles recalled, about six million of

the vehicles are in the United States.

In early February, days after the automaker said repairs to accelerator pedals

would begin, Toyota suffered another blow to its reputation when Japanese authorities

told it to investigate reports of faulty brakes on the Prius, a centrepiece of Japan's

cutting-edge technology. Approximately 437,000 of its 2010 flagship Prius hybrid and

other gas-electric models will be recalled worldwide.

Learning From Detroit

Over the years of its rise to the top, Toyota has made no secret of how much it

has learned from Detroit. Its first car, the AA, was a blatant copy of (or an homage to) a

Chevrolet sedan. Its executives scoured every corner of the Ford Motor Company in the

1950s, taking home ideas to Japan that later inspired the Toyota Production System.

The joint venture it launched with General Motors in Fremont, Calif., taught it how to

manage American workers, lessons it put to work throughout its factories not only in the

United States but in its plants around the world.

In 2002, the automaker's executives set an ambitious goal to own 15 percent of

the global auto industry by 2010, meaning it would surpass General Motors as the

world's largest carmaker. To get there, it would have to grow by 50 percent. It would

have to build new plants in the United States, China, and elsewhere in Asia, and

introduce dozens of new models. It managed to win bragging rights as the world's

biggest car company. But that focus on rapid growth appears to have come at a cost to

its reputation for quality, creating an opportunity for others to potentially take back

market share they lost to Toyota.

Recalls

Toyota's November 2009 recall was intended to fix a design flaw that could cause the

gas pedal to become trapped under the floor mat. It was prompted in part by the crash

of a Lexus sedan that ran out of control and crashed into a ravine near San Diego,

killing four people. But the automaker and federal safety officials continued to receive
reports of unintended acceleration and stuck pedals even in cases where the floor mats

had been removed, a stopgap measure recommended by Toyota.

As more details have emerged about the problems, the automaker has been facing

questions over whether it routinely fixed potentially dangerous defects in new models

without recalling those already on the road.

In announcing the second recall, Toyota said the accelerator pedal could wear down

and become difficult to depress, slow to spring back or get stuck partly depressed.

The company said its engineers have developed and "rigorously tested" a

remedy involving reinforcing the pedal before vehicles leave the factory to eliminate

excess friction. On cars and trucks that already have been sold, dealers will perform

what Toyota said was an "effective and simple" process that involves installing a steel

reinforcement bar into the pedal assembly to reduce the surface tension that could

cause it to stick. The automaker said the parts needed were already on the way to

dealers and that it had begun training workers how to make the repairs.

The Prius recall was the result of a software glitch leading brakes to fail. The fix,

which would be handled by dealers, would take about 40 minutes for each car, the

company said.

Separately, Toyota also recalled 7,300 of its latest-model Camrys in the United

States to fix a power steering pressure hose in the engine compartment that may be the

incorrect length. This could cause a hole in the brake tube and deplete the braking fluid,

interfering with braking, Toyota said in a statement.

 On Feb. 24, in a week where the automaker's executives faced tough questions

and criticism from Washington lawmakers, Toyota's president Akio Toyoda profusely

apologized for the recalls and the crisis of confidence over the mechanical defects. No

less than three committees in Congress are examining the Toyota recalls and the

response to them by the National Highway Traffic Safety Administration.

An analysis of government documents by The Times, which was published on

March 2, showed that many Camrys built before 2007, which were not subject to recalls,

have been linked to a comparable number of speed-control problems as recalled

Camrys.

While owners of all makes of vehicles have filed complaints with the government

about speed control problems, the analysis revealed that Toyota had more complaints

involving crashes than any other carmaker. Many of the complaints were about vehicles

not covered by recalls. The 2002 Camry, for example, had about 175 speed-control

complaints. Roughly half of those involved crashes.

By comparison, the 2007 Camry, which was recalled, was the subject of about

200 speed-control complaints, with fewer than a quarter of those resulting in accidents.

In all, federal safety regulators said they had received complaints alleging that

unintended acceleration in Toyota vehicles caused 34 deaths.

Toyota to raise global output 17% to 7.5 million units in 2010: report

NAGOYA (Nikkei) -- Toyota Motor Corp. /quotes/comstock/!7203 (JP:7203 3,505,

+30.00, +0.86%) informed major parts suppliers Friday that it plans to manufacture
roughly 7.5 million vehicles world-wide in 2010, up 17% or so from the projection for
2009, the Nikkei reported.
The figure, which excludes group firms Daihatsu Motor Co. /quotes/comstock/!7262
(JP:7262 888.00, +5.00, +0.57%) and Hino Motors Ltd. /quotes/comstock/!7205
(JP:7205 379.00, +6.00, +1.61%) , is at a level similar to Toyota's output in 2005 and
represents a decline of one million units from 2007.

But there is a good chance that the actual output in 2010 will exceed the
projection because it does not account for the positive impact of the Japanese
government's decision to extend the subsidy program for environmentally friendly
vehicles.

Following the severe global auto sales slump after the global financial crisis,
Toyota early this year embarked on steep production cuts centering on Japan, the U.S.
and Europe. As a result, its vehicle output sank as much as half from a year earlier
during the February-April period.

But sales in major markets have been recovering gradually, as inventory

adjustments have run their course and various governments have introduced measures
to stimulate car sales. With demand recoveries in China and other emerging markets
also providing support, Toyota's global sales recorded their first year-on-year rise in 15
months this October.

Toyota sees sales growth in emerging markets continuing next year. In China,
whose 2009 sales are expected to push it above the U.S. to make it the world's biggest
auto market, the leading Japanese carmaker plans to expand its network.

In North America, the company anticipates that sales will pick up as the economy
recovers.

And Toyota believes that Japanese sales of its Prius hybrid and other vehicles
will remain solid, thanks to the extension of the subsidies for eco-friendly vehicles until
September.

Toyota Sales Drop, Just Like Everybody Else

Toyota Motor Sales U.S.A. just got rocked with a 33.8 percent sales decline for

the month of November versus sales for that month one year ago. Is Toyota just feeling
the pain that all automakers are experiencing in the North American market at present,

or have their newest models and aggressive attempts at sales growth in America

missed the mark?

Toyota has always known how to build great small cars; the automaker built its

reputation on efficient, rock-solid reliable economy vehicles. In their quest for North

American dominance, vehicle sizes, curb weights, and consumption have all risen at

Toyota. Luckily, the carmaker hasn't abandoned its roots and has vehicles like the

Yaris, Corolla, wildly popular Prius, and Toyota Camry Hybrid for buyers now seeking

more efficient vehicles. Additionally, for the European and Japanese market, Toyota

builds a host of lean and efficient vehicles. Perhaps we'll see some of those models

trickle into the North American lineup as Toyota re-adjusts to a tough new market.

Government may mandate 'brake-override' systems; Toyota

announces sales drop

The federal government may recommend that automakers include "brake-

override" systems in all new vehicles to avert the sort of runaway acceleration that has

been reported in several popular Toyota models and linked to a growing number of fatal

accidents.

Transportation Secretary Ray LaHood told members of the Senate commerce

committee during a hearing on Toyota recalls that a mandate for override devices was

something regulators were considering.

 "We think it is a good safety device and we're trying to figure out if we should be

recommending that," LaHood said. Such override systems give priority to the brakes

when an engine's computer thinks that a driver has pressed both the accelerator and

brake pedals.

The hearing provided the backdrop for another tough day for the Japanese

automaker, which also Tuesday reported a nearly 9 percent drop in U.S. sales in

February. The company has been preparing an incentive scheme aimed at rebuilding

consumer confidence, but the controversy shows few signs of abating.

The Department of Transportation said Tuesday that complaints of fatal

accidents involving unintended acceleration had risen to 43 incidents with 52 deaths.

About three-quarters of those reports were received in the last four months, after Toyota

issued a large recall.

During Tuesday's hearing, Toyota's chief engineer and chief quality officer faced

more stern questions from lawmakers about how the company overlooked consumer

complaints of runaway cars.

One of the key unresolved issues in the controversy has been whether the

automaker has corrected all of the problems that caused unintended acceleration.

Toyota has issued recalls for floor mats and gas pedals, but some safety advocates

believe that something is awry in the company's engine electronics.

According to documents presented at the Senate hearing, records compiled by

State Farm, the nation's largest auto insurer, show that claims of unintended
acceleration roughly doubled after Toyota installed electronic throttle controls in the

Camry in 2002.

But Toyota's chief engineer said that the company had thoroughly analyzed its

electronics and that they are not the source of unintended acceleration.

"I want to be absolutely clear: As a result of our extensive testing, we do not believe

sudden unintended acceleration because of a defect in our [electronic throttle control

system] has ever happened," said Takeshi Uchiyamada, who also is a company

executive vice president.

The disagreement over the cause has left Congress and federal regulators grasping for

answers as to whether the cars are safe.

To settle the dispute, a Web site, Edmunds.com, announced Tuesday a $1 million prize

for anyone who can find another cause of the phenomenon. According to the company,

the prize will go to a person who can "demonstrate in a controlled environment a

repeatable factor that will cause an unmodified new vehicle to accelerate suddenly and

unexpectedly."

"We'd like to get to an answer," Edmunds chief executive Jeremy Anwyl said.

Sen. John D. Rockefeller IV (D-W.Va.) said that Toyota should be forced to install

brake-override systems on all Toyota vehicles currently in the United States, regardless

of how old they are or how much the process will cost.
"This controversy is going to go on for a while," said David Cole, chairman of the Center

for Automotive Research. "The next issue will be the product liability lawsuits."

New sales numbers showed that Toyota's competitors have picked up customers, some

dramatically so: Ford's sales rose 43 percent over February last year. By contrast, sales

of the Toyota Camry, the company's best-selling car and the subject of two recalls, were

down 20 percent.

The drop in Toyota's February sales came despite the fact that dealers had already

begun to offer more incentives to attract buyers. In response to sinking public

confidence in the brand, Toyota Motor Sales said it would offer the "most far-reaching

sales program in its history."

The marketing program offers 0 percent financing for as long as five years, and cheaper

leases. In addition to the incentives, the automaker is rolling out a series of television

commercials that will feature customers who recently purchased Toyota vehicles.

Others will show salespeople, customer service reps and technicians thanking

customers for their loyalty to the brand.

"It's a great time to buy a Toyota," said Bob Carter, group vice president and general

manager of the Toyota Division of Toyota Motor Sales USA.

Conclusion

There is no straight answer for the problem that Toyota Motors is facing now.

The only things they can do is to be careful of every decision they will made in order not

to happen the fatal accident cause by their mistake. Toyota must regain the trust of their

costumer and should not sacrifice the following: quality of their products and the safety

of their costumer. They must learn their mistake.

Reference:

The Washington Post

New York Times

Market Watch

Auto Blog

Wikipedia

Britannica Encyclopaedia

Answer.com

Toyota.com
 Holy Cross of Davao College
Sta. Ana Avenue, Davao City

In Partial Fulfilment of Requirements

In
International Economics

Submitted to:

Mrs. Theresa Fabiania

Instructor

Submitted by:

Don Pelicio Ngoho

March 2010