Toyota Finds Forgiveness In China And Japan

Toyota (TM) found some measure of redemption in the US last month. Its sales rose 43% over March 2009.  Its unit sales were nearly the same as those of GM and Ford (F) and the company’s market share rocketed up to 17.5%. It was as if the 8.8 million recalls of its vehicles had never happened. But, everyone knew that huge incentives were critical to the rise of customers at the Japanese company’s dealerships.

But, Toyota’s sales improvement spread well beyond the US.  The No.1 car company in the world sold 33% more cars in China in March than it did last year–61,200. This still puts it well behind market leaders GM and VW. Clearly the leaders were not able to do much to exploit Toyota’s shattered image, perhaps because Toyota’s problems are starting to look temporary.

Toyota also did remarkably well in its home market. Sales in Japan rose 40% over February. The figures were helped by a Japanese stimulus package aimed at helping domestic car companies. That program ended March 31, which was almost certainly part of Toyota’s success as buyers rushed to dealers to take advantage of incentives before they expired.

Part of the rise in Toyota’s Japan sales last month may have to do with national pride. Many Japanese believe that the car company has been singled out for harsh criticism in the US because Congress has an incentive to help GM and Chrysler both of which have received tens of billions of dollars in loans from taxpayers. Whether that is true not does not matter much. Many Japan believe it.

The success of Toyota goes beyond incentives and Japanese concerns about the “bias” of the US government. Toyota’s rebound from the drop in sales caused by concerns about its product defects happened faster than almost any expert would have assumed. And, that is probably because of the brand equity that the car company has built over decades by delivering the highest quality cars as reasonable prices. It is easy to forget that each of the three American car firms have had large recalls of their own over the last decade. The consumer may remember that.

The years of dominance of consumer perception of car quality reflected the JDPower and Consumer Reports surveys must still echo in the car buyer’s memory. Toyota’s is back as the formidable competitor that it was for years and that is a sort of a miracle.

Douglas A. McIntrye