- The Washington Times - Tuesday, May 18, 2004

TOKYO - With video games, baby strollers and manicure kits to welcome visitors, dealers at a Toyota showroom in suburban Tokyo are working to convince buyers that today’s models have nothing to do with their parents’ boring old cars.

“We try to create a warm feeling especially to appeal to young women so they feel they can drop by casually,” said Hiroshi Ishizawa at the dealership, which also holds costume parties and raffles with DVD recorders as prizes to win customers.

Such efforts by Toyota dealers have paid off in Japan and around the world. This past week, the Japanese automaker marked its second straight year of record profits, earning $10 billion for the 12 months ended March 31, up 55 percent from the previous year. Sales boomed in all key regions — the United States, Europe and Asia.

Last year, Toyota surpassed Ford Motor Co. as the world’s second-largest automaker after General Motors Corp. in terms of vehicle sales.

“The results drive home what an awesome company Toyota has become,” said Kunihiko Shiohara, an analyst at Goldman Sachs in Tokyo.

Toyota has freshened up its image in North America as well. Having scored big success with baby boomers around the world with its reputation for good mileage and durable quality, Toyota is determined to extend its appeal to boomers’ children.

Toyota began a marketing campaign last summer in California called Scion to revamp its image by linking video game contests, hip-hop CDs and underground film showings with two low-end car models targeting youngsters.

The campaign will expand to the entire United States next month with a third model. Although Scion sales at 29,000 so far are minuscule compared with the 410,000 U.S. 2003 sales for the Camry, the nation’s best-selling car, numbers are picking up.

“If you get people to buy your brand as their first car, chances are good they’ll keep coming back,” said Shinji Kitayama, analyst with Shinko Securities in Tokyo. “Toyota is moving quickly to deal with that.”

And there’s Toyota’s reputation for well-made cars that underpins its image.

When Toni Sterling of Louisville, Ky., began shopping for a new vehicle a year ago, she was driving a Nissan but decided to switch to Toyota because “even among Toyota, Nissan and Honda, I consider Toyota the top of the line for quality.”

Still, Miss Sterling, 41, was attracted by Toyota’s improved styling and eventually chose a 2003 Highlander, Toyota’s mid-sized SUV.

For fiscal 2003, Toyota sales in North America reached 2.1 million vehicles, an increase of 121,000 over the previous year, its best performance to date.

Toyota, which opened a state-of-the art design center in Japan last year, is strengthening its car design to take advantage of the futuristic image associated with things Japanese — a flair Toyota designers call the “J-factor.”

“For 20 years, we’ve been trying to catch up with other automakers. Perhaps we have entered the stage that we must begin to develop our own style of products,” Toyota President Fujio Cho told the Associated Press recently. “Being a good member of the international community is tantamount to being a good Japanese.”

For years, more than half of Toyota’s profits came from North America. But the latest results show Toyota sales are also strong in other regions such as Europe, the Middle East and Southeast Asia.

Toyota now controls about 11 percent of the global market. It appears headed toward its goal of clinching 15 percent — roughly the same share as General Motors today — before 2020.

Toyota is doing so well its only danger may be keeping up with its own growth.

Growth can potentially stretch an automaker’s resources thin at a time when the industry is rapidly globalizing and demand is diversifying, analysts say.

Toyota has also avoided outsourcing, or separating parts makers from the core business — the more common route for automakers these days to grow and trim costs. Instead, it keeps operations within the Toyota group, which has proved a potent way to slash costs through the benefit of sheer volume.

No one expects Toyota to stumble anytime soon.

Even in Japan, where a long economic slowdown has crimped auto sales, Toyota is going strong, controlling more than 42 percent of the market.

Like many Toyota owners, Hideki Sahara loves his Aristo sedan, sold as a Lexus model in North America.

“First of all, it’s reliable,” said the 34-year-old architect. “And it’s fun to drive. I never get tired of it.”

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