Politics, demographics, new clout of U.S. crew shaped the evolution of Toyota's product line
But the intent to build in high volume was there from the beginning.
Dave Power, 76, the founder of J.D. Power and Associates, recalls his first visit to Japan in 1968 and his surprise at finding an unusual chart on a wall in a Toyota plant. It was tucked away near the administration section, where the average worker was not likely to see it.
"I had to bow my head to get in the door. The doors in the offices were under 6 feet. The doorjamb was at eye level. The chart looked like it was hand-done," he says.
The chart displayed three columns that indicated U.S. sales for General Motors, Ford and Chrysler, from 1968 through the 1980s. A fourth column "had Toyota coming out of nowhere," Power says, "and just going up and up for more than 20 years out, where they were going to catch Chrysler. That really set me back."
His Toyota guides would not comment on that. "They didn't want to show that that was what they aspired to," Power says. "I don't think they had a plan on what models to build. The goal was to keep growing."
That year, when Toyota was charting those ambitious goals, its U.S. dealers were living off two vehicles. The Corona, introduced in 1965, almost single-handedly pushed sales volume from 6,404 in 1965 to 72,554 in 1968. The Land Cruiser, which had carried dealers for several years after Toyota had all but pulled out of the car market to review the landscape, was still a popular but small niche player.
AN EYE ON WASHINGTON
Shotaro Kamiya, who built Toyota Motor Sales Co. in Japan into an overpowering marketing machine, was behind the push to move into the United States as fast as possible. He feared the U.S. government might clamp down on the fast-growing import segment, according to Susumu Yanagisawa, now 74, who joined Toyota Motor Sales in 1958 and was the Americas section manager from 1971 to 1983. Kamiya prevailed despite the objections of Japanese engineers who didn't think they had the right products for the market.
Although Toyota had strong growth in the 1970s, much of it came from selling cars little different from those sold in Japan. But as the U.S. sales arm grew and profits rose, its influence with the parent company increased.
Combine that with the arrival of hard-charging Bob McCurry — who was promoted to head of sales operations in 1984 — and the like-minded Yukiyasu Togo, and Toyota began to see the light: Sales could rise even higher if the company built vehicles specifically for the United States.
It was the U.S. dealers who kept urging Toyota to enter more segments, such as vans, larger sedans and the nascent SUV segment, says Bryan Bergsteinsson, 62, who was with Toyota Motor Sales for more than 25 years.
"Dealers pushed us into the van market, although we were there early," Bergsteinsson says. "They pushed us from the Toyota Van to the Previa, and we finally got it right with the Sienna. But the big truck was what they really pushed.
"There is a built-in mentality at Toyota to always challenge yourself. If you are standing still, you are getting run over. We pushed up, looking at more segments, or we asked about how we were not measuring up in segments."
The push to enter these new segments required stacks of American market research to persuade Toyota Japan to invest the billions of dollars needed to expand the product line, notes Chris Hostetter, Toyota vice president of advanced product strategy and product planning.
"We had a portfolio that was great for boomers when they were singles and couples," Hostetter recalls. "But the big struggle was how to manage the transition of our buyers to families. We spent a lot of time fighting for Camrys and four-door 4Runners, realigning our portfolio."
Toyota was not nearly as aggressive with product then as it is now, says Ed Ohlin, 56, who was a Toyota product planner in the 1980s and 1990s and now helps develop Toyota's retail operations in China.
"I don't know if it was conservatism or a lack of resources," Ohlin said. "Toyota followed Honda a lot back then, and Honda had an unwillingness to go into the truck side or be more aggressive with SUVs and family vehicles, where the size of your household determined what you bought."
But the American staff won over Toyota Japan by showing them basic demographic trends.
"We realized that if we were going to take care of our customers, we had to look at the same markets they were looking at," says Don Esmond, 63, Toyota Motor Sales U.S.A. senior vice president. "We had to give them something to step up to, like Camry, Avalon, van, SUV and finally a full-sized truck. Bob McCurry was instrumental in pointing out those opportunities to Toyota Motor Corp."
The American executives pushed Toyota to the next level, from one segment to another, according to Yoshio Ishizaka. Long before Ishizaka became president of Toyota Motor Sales U.S.A. in 1996, he was chief coordinating officer, a main liaison between the U.S. operations and Japan.
Recalls Ishizaka, 67: "They said, 'You know we're a Japan-based company. However, based on our experience, we're not covering the customers in such and such a field, like large pickup trucks.' We largely accepted the U.S. executives' suggestions and input to expand our business."
McCurry, a former Chrysler executive, was largely responsible for transforming Toyota Motor Sales U.S.A. into an ever-expanding operation during the 1980s and early 1990s.
While selling cars was limited under the Voluntary Restraint Agreement of the 1980s, Toyota expanded quickly into the light-truck segment. Initially that meant converting a two-door pickup into an SUV by adding a shell and calling it the 4Runner. Toyota also imported delivery vans, which looked like giant toasters, to compete against Chrysler minivans.
But Toyota product planners quickly got the point across to Japan that vehicles had to be more distinctive for U.S. buyers. The 1990 4Runner that followed was a true four-door SUV, and the Previa turned the minivan segment on its ear.
The end of the import curbs in 1985 allowed Toyota to begin planning larger cars, such as the U.S.-specific Camry and Avalon, which fueled Toyota's growth into larger cars.
The entry into the U.S. full-sized pickup market was traumatic. "Even having experiences in the U.S. market for several decades, a large pickup market was one we were not good at. We didn't have one," says Toshiaki Taguchi, 66, who was an executive coordinator at Toyota Motor Sales U.S.A. from 1976 to 1981 and was CEO of Toyota Motor North America Inc. from 2000 to 2004.
By branching out, Toyota found itself going face-to-face with the Big 3.
"There is always a hesitation and reluctance to go against the Big 3 head-to-head because we are perceived as an import brand," says Yoshimi Inaba, the 61-year-old retired CEO of Toyota Motor Sales U.S.A. "In any market we go into, we feel like we are given the opportunity to do business there. Therefore, we always ought to be thoughtful and conscious that they let us come in."
Eventually, as Inaba notes, localization and heavy investment in the United States would take the company to a point "where we don't have to be shy about going into any segment."
GETTING THE 'REAL' PICKUP
Sterling McCall, a Houston Toyota dealer, was on the dealer council that joined with McCurry to pitch the Japanese executives for a "real" full-sized pickup. They met with the board of directors in Japan, and each one had a speech to make.
"'Make sure you make it big and make sure you put a V-8 in it,'" McCall says he told the board. "They listened, but they didn't do it."
Fear of arousing anti-Japanese sentiment was one reason Toyota was conservative with its first effort at a larger truck. "That was a political decision on the part of the Japanese," says Fritz Hitchcock, 68, who has been a Toyota dealer in Southern California since 1976. "The dealers wanted a (Ford) F-150 competitor right out of the chute. But politically, they weren't going to do it. Most dealers understood that."
From the 1970s through the mid-1990s, Japanese executives were nervous whenever a political group or labor union barked, Hitchcock says. But now, with a large presence in the United States, they are less jumpy.
"They think they have the consumer's ear and they can withstand pretty much everything," says Hitchcock. "They are never going to do anything outlandish that would upset their mission, which is to get to 15 million cars worldwide by 2012 or maybe 2015. They have a mission, and they are going to accomplish it."
You can reach Mary Ann Maskery at (Unknown address).