NAGOYA, Japan -- Toyota Motor Corp.'s new top executive for North America lists lower incentives and greater local purchasing and product development among his top objectives.
Satoshi Ozawa, who last month took control of a newly reorganized unit made up of the developed markets of North America, Europe and Japan, said reining in incentives is "the first challenge" to building brand value.
"We will not simply go after volume," Ozawa told reporters while spelling out his top four priorities. "We are going to restrain discounts and incentives."
Ozawa's comments come as Toyota Motor Sales U.S.A. Inc. cranks up incentive spending on its Camry sedan, amid increasingly tougher competition from the Honda Accord, Nissan Altima and others. His remarks suggest a concern about the effect excessive spiffs might have on long-term value.
The 39-year Toyota veteran said his No. 2 priority is increasing local product development in North America and strengthening the local supply chain. Doing so would help, in part, offset the impact of fluctuating foreign exchange rates.
Ozawa's other top priorities:
- Establish a cost structure that delivers profits even if the company is hit by a double punch of recession and unfavorable exchange rates. Toyota slumped to its first operating loss in seven decades after the 2008 global financial crisis, and then was stung again by four straight years of yen appreciation that hurt export earnings. The new goal is building a manufacturing base that can stay in the black even at a level of 80 to 85 yen to the dollar. The rate is now hovering around 100 yen to the dollar, which is more favorable to exports from Japan.
- Maintain production of at least 3 million vehicles in Japan. That will hinge partly on being able to boost sales in Japan, despite the overall market's downward trend.
He wants to boost domestic sales to 1.5 million vehicles, thus soaking up half of that made-in-Japan output. That is up from the 1.45 million units Toyota officially targets for 2013, but still down from 1.7 million last year.
But there is one caveat, Ozawa said: Spurring domestic demand to that level will require the government to trim taxes on automobile purchases.