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Why Toyota’s afraid of being number one


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While most states set up their lobbying offices in Tokyo, West Virginia's headquarters is in Nagoya, near Toyota's headquarters. Few have worked harder than Rockefeller to persuade Toyota to build a plant in his state. In 1996, not long after the Clinton luxury tax was quashed, the state got a $400 million engine plant in Buffalo, W.Va. Today 1,000 people work there, and the investment has swelled to $1 billion.

In 2001 Toyota gave $1 million to the Blanchette Rockefeller Neurosciences Institute at West Virginia University, a medical research center named after the senator's mother. About the same time, Toyota and Honda Motor Co. began backing a push for tax credits for consumers who bought hybrids. The Prius was selling at a premium over conventional cars and Toyota wanted a marketing tailwind. Four years later, Congress passed a credit for up to $3,150. One of the bill's sponsors was Rockefeller. He denies Toyota directly lobbied him over the hybrid sweetener. But Toyota did talk to his staff about the bill, and Rockefeller acknowledges that "maybe I learned something from Toyota" about automotive technology.

Few automakers have a more unassailable environmental pedigree than Toyota (its closest rival is Honda). And no car better represents the company's green cred than the Prius. To hear Toyota tell it, the hybrid was simply so trendy and well-engineered it practically sold itself. There's more to the story than that.

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Just before Toyota was about to launch the Prius in 1999, it called Dan Becker, director of global warming initiatives at the Sierra Club. The company wanted the group's seal of approval for the Prius. Becker persuaded his superiors to create an award for the best hybrid technology. The idea was controversial, and Becker says some Sierra Clubbers called him a "whore for the auto industry." In the end, Honda's hybrid Insight won the Sierra Club Award for Excellence in Environmental Engineering; the Prius won the following year.

The Toyota-Sierra Club dance didn't end there. In 2001, the group borrowed a half-dozen Priuses and drove them from Maine to Florida, stopping in cities along the way and letting people drive them. The group also held a cross-country trek along Route 66, hitting towns and cities from Chicago to Los Angeles. The drive-and-tell seemed to work wonders. Says Becker: "Someone at Toyota told me that a phenomenal percentage of people who tested the car bought one." By 2004, Toyota had passed Honda and had the greenest image. "They just blew past us in the surveys," says John German, manager for environment and energy analysis for American Honda Motor Co. "They're in first place now."

Meanwhile Toyota turned to its point man in celebrity-ville: Mike Sullivan, who owns Toyota of Hollywood. Sullivan got hold of 26 Priuses and took them to the 2003 Oscars. Before long, such stars as Cameron Diaz and Leonardo DiCaprio were being photographed ("Look, we're so green!") with their Priuses. "It became the cool thing to do," says Sullivan. Now, every November, Toyota sponsors the annual Environmental Media Assn. Awards in Los Angeles. TV shows and movies that feature environmental causes get a trophy. Celebrities enter the ceremony along a green carpet, Sullivan is a sponsor, and the Toyota image is omnipresent.

Heading for the heartland
Today, Toyota is the most respected car company in America. And yet to become the biggest-selling carmaker in the U.S., it needs to make serious inroads into the heartland, where imports are often considered un-American and the pickup truck rules the road. Nationally, Toyota has a 17.4 percent retail share. But once you break down the numbers by region, a more nuanced picture emerges. In the Midwest Toyota has just 11%, according to R.L. Polk & Co., which tracks car registrations. And in Texas, Toyota has a meager 5 percent share of the pickup market. Mike Foster will proudly tell you why. A 50-year-old homebuilder from San Antonio, he has 195,000 miles on his Ford F-150. "I've never owned a Japanese car of any kind," says Foster. "I believe in supporting American jobs. I know Toyota creates jobs here, but the money goes back to Japan."

Knowing what it's up against, Toyota has rolled out a $300 million marketing campaign for the Tundra. It is sponsoring livestock shows, bass-fishing tournaments. and made its NASCAR debut on Feb. 18. Toyota has a campaign, internally dubbed "Prove It," involving free test drives at Bass Pro Shops, a national chain of outdoor sports shops, and 84 Lumber stores. Its TV ads feature a narrator, complete with Texas drawl, promoting the Tundra as "the all-new, built-in-America, Toyota truck."

Meanwhile, Toyota is out winning hearts and minds in San Antonio's south side, where the factory is. In late January, the company brought its 16-year-old literacy program to Sky Harbor Elementary School. There, in the Toyota Family Literacy Program Room, Hispanic families are learning to read and write English. "The south side had not been receiving much attention," says Jada Pitman, who runs the program. "But now you have homes and roads being built to accommodate Toyota. Their presence is really being felt in the community."

In Washington, too. Toyota's chief lobbyist, Josephine Cooper, who formerly told Detroit's story on the Hill, has been busy. At her behest, Toyota has amped up its advertising efforts inside the Beltway. Its latest campaign has been running on TV and in such publications as Roll Call, Washingtonian, Congress Daily, and Congressional Quarterly. It reminds politicians that Toyota has spent $17 billion over 20 years on new plants and that it directly employs 38,000 Americans.

Five decades after selling its first cars in America, Toyota still feels the need to apologize for — or at least justify — its success. Now, the company's relentless expansion is bringing unwanted attention. A series of recalls has hurt Toyota's reputation for quality. Environmentalists complain that the automaker's move into the big-truck market makes it look more and more like the Big Three all the time. And James E. Press, who runs the North American operations, acknowledges that Toyota is under greater scrutiny now that it's closing in on GM as the world's No. 1 automaker. Yet among Toyota's U.S. leaders, at least, there is the feeling that the humility has gone far enough. During a recent meeting at the North American headquarters in Torrance, Calif., executives agreed Toyota should stop worrying about being loved and learn to accept industry leadership. Are you listening, Watanabe-san?

Copyright © 2009 The McGraw-Hill Companies Inc. All rights reserved.


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