JAPAN: Analysts, government officials and Japanese residents say they are worried Toyota's woes may spill over to the rest of the nation

Record ID: 464036

  • Title: JAPAN: Analysts, government officials and Japanese residents say they are worried Toyota's woes may spill over to the rest of the nation
  • Date: 30th January 2010
  • Summary: TOKYO, JAPAN (JANUARY 29, 2010) (REUTERS) FOUNDER OF MIZUNO CREDIT ADVISORY, TATSUYA MIZUNO, WALKING (SOUNDBITE) (Japanese) FOUNDER OF MIZUNO CREDIT ADVISORY, TATSUYA MIZUNO, SAYING: "The reason why this large-scale recall is happening over and over again is because of the company's emphasis on cost-cutting measures. This is not just Toyota's internal problem but cost pressures towards parts-suppliers as well." REPORTER TALKING TO MIZUNO (SOUNDBITE) (Japanese) FOUNDER OF MIZUNO CREDIT ADVISORY, TATSUYA MIZUNO, SAYING: "The biggest gainers will be the U.S. Big Three automakers. They incurred the biggest damage from Toyota's strong brand image, technology, cost-efficiency, overall reputation and its market position. So if Toyota faces a relative drop in its market position, then the Big Three automakers will rise." HANDS OF MIZUNO AS HE TALKS (SOUNDBITE) (Japanese) FOUNDER OF MIZUNO CREDIT ADVISORY, TATSUYA MIZUNO, SAYING: "I feel that not only the world's opinion of Toyota but also of Japan in general may fall another step down." ELECTRONIC STOCK PRICE BOARD ON STREET OF TOKYO (SOUNDBITE) (Japanese) 62-YEAR-OLD BUSINESS MAN, TAKEO NAMEKATA, SAYING: "If Toyota hits hard times, there's a high probability that Japan will also. In particular, I think trade will suffer." PEOPLE READING THE STOCK BOARD (SOUNDBITE) (Japanese) 61-YEAR-OLD EXECUTIVE AT BUSINESS CONSULTANCY, MASANORI KOFUNE, SAYING: "Toyota represents such an insignificant percentage of Japan's overall GNP. This is just Toyota's problem." PEOPLE WALKING ON THE STREETS OF TOKYO (SOUNDBITE) (Japanese) BUSINESSMAN, TOSHIO KOMACHI, SAYING: "I think there's no need to make much ado about it. It didn't cause the deaths of thousands of people." TOKYO STOCK EXCHANGE BUILDING VARIOUS OF STOCK EXCHANGE OFFICIALS WORKING CIRCLING ELECTRONIC STOCK BOARD TOYOTA STOCK PRICE CIRCLING AT 3,510 OR DOWN 50 POINTS STOCK INFORMATION BOARD STOCK PRICES ON ELECTRONIC BOARD NIKKEI STOCK INDEX SHOWING AT 10,236.29, DOWN 178.00
  • Embargoed: 14th February 2010 12:00
  • Keywords:
  • Location: Japan
  • Country: Japan
  • Topics: Industry
  • Reuters ID: LVAALL8016JHV1TVDE42F6QIDQVG
  • Story Text: When Toyota Motor Corp was on the brink of overtaking General Motors as the world's biggest automaker in 2008, executives were busy sending out warning signals about the dangers of being No.1.
    Toyota is now witnessing the realisation of those fears, caught in a mushrooming recall debacle affecting as many as 8 million cars -- a development many say underscores the difficulty of maintaining top-notch quality in a hasty expansion and has spawned fears amongst many in Japan that its woes will spill over to the whole of the Japanese economy.
    Toyota President Akio Toyoda has not commented publicly on the faulty accelerators and floor mats since expressing regret for the deaths of four people in a crash linked to the problems in August last year.
    But the level of attention on Toyota's woes -- from consumer groups, media and the government -- is also the manifestation of another major fear that Toyota has harboured: that public opinion could be unkind to those at the top even in Japan.
    The Japanese Economy Minister Masayuki Naoshima was quick to blame the global economic system.
    "I think it's a serious issue because of the big scale. (We're witnessing) one of the risks of the global system," Naoshima told reporters on Friday (January 29).
    "Ultimately I'd like them to cope with the situation resolutely, especially in regaining the confidence of the consumers," he added.
    Many analysts, such as Mizuno Credit Advisory founder Tatsuya Mizuno, blame Toyota's pursuit of cheaper supplies, especially to beat the strong yen overseas.
    "The reason why this large-scale recall is happening over and over again is because of the company's emphasis on cost-cutting measures. This is not just Toyota's internal problem but cost pressures towards parts-suppliers as well," he told Reuters on Friday.
    In addition to the recall, Toyota has shut down sales of its best-selling vehicles in North America under pressure from the Obama administration to address the product safety issue, in an almost unheard-of intervention.
    Unlike GM, Toyota has feared the backlash and shunned the spotlight as the world's biggest automaker. As the Detroit giant -- once the symbol of U.S. industrial might -- faced bankruptcy last year, those worries had escalated.
    However now analysts say the U.S. Big Three manufacturers may have been handed a lucky break.
    "The biggest gainers will be the U.S. Big Three automakers. They incurred the biggest damage from Toyota's strong brand image, technology, cost-efficiency, overall reputation and its market position. So if Toyota faces a relative drop in its market position, then the Big Three automakers will rise," Mizuno said.
    Toyota said on Wednesday (January 27) it would offer to replace floormats or accelerator pedals on another 1.1 million vehicles across five models in the United States because many consumers had called asking for a remedy.
    A Toyota spokesman said there was in fact no known glitch in those models, and that the voluntary action was solely meant to appease worried drivers.
    However if consumers remain unconvinced, many say Toyota's woes may also affect the overall image of Japanese brand names, many which already have suffered setbacks in the recent economic crisis.
    "I feel that not only the world's opinion of Toyota but also of Japan in general may fall another step down," Mizuno added.
    That sentiment was repeated on the streets of Tokyo.
    "If Toyota hits hard times, there's a high probability that Japan will also. In particular, I think trade will suffer," Takeo Namekata, a 62-year-old Japanese businessman, told Reuters on Friday.
    Not all were that sanguine.
    "Toyota represents such an insignificant percentage of Japan's overall GNP. This is just Toyota's problem," said Masanori Kofune, a 61-year-old managing director at a business consultancy.
    Others thought the whole scare overblown.
    "I think there's no need to makes much ado about it. It didn't cause the deaths of thousands of people," said Toshi Komachi, another Tokyo businessman.
    Toyota, Japan's largest company with a market capitalisation of around 141 billion U.S. dollars, produces dozens of models around the world and has more than 500 subsidiary companies.
    Toyoda, the grandson of Toyota's founder, has outlined broad steps aimed at returning the company to profit and speed up decision-making, but has yet to announce new plans to improve quality checks.
    In stock markets on Friday, Toyota Motor Corp skidded further after the world's top automaker said it would extend a recall of millions of vehicles.
    Trade in Toyota shares remained active with some 29 million shares changing hands, after volume of more than 38 million shares on Thursday (January 28), the most active day of trade in the carmaker's stock in more than 20 years.
    This pushed down overall stocks, as the benchmark Nikkei fell 216.25 points to 10,198.04, its lowest close since Dec. 21.
    The Nikkei shed 3.3 percent in January, following December's 12.9 percent jump, which was the index's biggest one-month percentage rise in 14 years.
    Toyota fell 2 percent to 3,490 yen after the world's top automaker's problems intensified as it announced it would extend to Europe and China a recall of millions of vehicles due to faulty accelerator pedals and floor mats.
    Toyota's stock has tumbled nearly 14 percent in the past week.
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