Fresh from a grilling by US lawmakers, Toyota president Akio Toyoda will speak today in China about his company’s quality problems, seeking to boost confidence and ease consumer worries in the world’s biggest auto market.
Toyoda, who testified at a US congressional hearing last week about the spate of global recalls plaguing Toyota Motor Corp, will speak to reporters at a Beijing hotel, company spokeswoman Ririko Takeuchi said.
The number of vehicles being recalled in China is small compared with the 8.5 million vehicles recalled worldwide since October for sticky gas pedals, faulty floor mats and glitches in braking software.
But Toyota has ambitious plans for growth in China, where it and its global rivals are finding growth that was stagnating even before the recall crisis in traditional American and European markets.
The flood of recalls in the US has shaken confidence in Toyota’s reputation for top-grade quality. In China, the company announced a recall of 75,552 RAV4 sport-utility vehicles in late January because of the gas pedal problem.
Toyota has said its plans to expand in the Chinese market are unchanged, with its sales in the country expected to rise to 800,000 vehicles this year, up from 709,000 this year.
China’s overall vehicle sales soared 45 percent last year to 13.6 million, overtaking the US as the world’s biggest auto market.
So far, China’s state-controlled media have made only muted comment on the recalls issue. The problem is mainly viewed as a precautionary example of potential pitfalls for China’s nascent domestic car industry.
“It is a wake-up call [for the Chinese]. This is not easy, this is a major challenge to get the product right and keep customers satisfied,” said John Bonnell, a J.D. Power analyst in Bangkok.
Toyota got a relatively late start in China, after fitful efforts to break into the market early on in tie-ups between its subsidiary Daihatsu Motor Co and a state-run automaker, Tianjin Automobile Industry Holding Co.
Only in May 2006 did Toyota roll out its first made-in-China Camry, in a partnership with Guangzhou Automobile Group, based in the affluent Chinese market near Hong Kong. Toyota also has a partnership with FAW Group, another state-owned automaker based in northern China.
For all the automakers, China and other fast-growing emerging markets are providing growth and profits to offset losses in their traditional market.
“If it wasn’t for China last year, a lot of the makers, Toyota, Nissan, Honda, would be staying in the red. China is probably their most profitable operation,” said Christopher Richter, an auto analyst with CLSA Asia Pacific Markets in Tokyo.
Meanwhile, analysts and experts say Toyota’s reputation is by no means beyond repair.
But the company’s embattled president Akio Toyoda might be warmed to know that several high-profile firms in the past have recovered strongly from public relations disasters, sometimes even strengthening their positions long term.
Johnson & Johnson’s crisis management over poisoned Tylenol pills in the early 1980s turned the US drugmaker into a hero, PR industry experts say.
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