Toyota--What A Difference A Year Makes

The sales of  Toyota (NYSE: TM) cars and light trucks rose 42% in February to a total of 141,826. Toyota sold nearly as many cars last month as Ford Motor (NYSE: F) did. Ford’s total was 156,323. Toyota’s market share rose to 14.3% in February from 12.8% a year ago.

Toyota recalled 5.3 million vehicles in one day last January. It made further recalls later in the month. Many of the vehicles taken back to dealers had accelerator problems. It turns out that most did not involve the mechanics of the accelerators themselves, but Toyota sales fell most of last year.

There is no reasonable explanation of why Toyota’s fortunes changed so quickly, but some trends helped the largest car company in the world.

The American appetite for “green” cars grows by the day. The leading car in this sector is the Toyota Prius. Buyer enthusiasm for the vehicle never dropped much early last year. Consumers apparently believed that the Prius was the best of its breed.

Another reason in Toyota’s favor is the brand equity it has established over the last four decades for producing high quality cars at reasonable prices. Toyota’s quality ranking in surveys like JD Power and Consumer Reports fell slightly though the latest Consumer Reports survey shows the company has since rebounded.

Toyota had two other advantages as it clawed back the market share it had before the recalls. The first is that there was always some level of reasonable skepticism about why Toyota’s vehicles had accelerator problems. The second is that Toyota has nearly limitless money to market its cars and trucks and offer carefully targeted discounts. What a firm like Chrysler could not afford was easily within the financial means of Toyota.

There have been dozens of recalls of cars and light vehicles made by other companies since last winter. Recalls seem more numerous now, even if history does not confirm that. Toyota showed how resilient a powerful brand can be. It can resume its assault on GM and Ford again.

Douglas A. McIntyre