Toyota will invest over $1 billion in a fourth-quarter marketing blitz, said division bost Bob Carter, to take advantage of recovering U.S. auto sales -- and to try to overcome recent setbacks to its image.
Millions of Toyota customers will receive notice of a massive recall, this week, the result of a problem with driver floor mats that can come loose and jam the accelerator pedal. But a senior Toyota executive, speaking to journalists during a Detroit luncheon, Monday, stressed federal regulators have ruled out the possibility that the company’s products could also face sudden problems with their electronic engine control systems.
During a blunt and wide-ranging conversation, Bob Carter, head of the powerful Toyota division, in the U.S., acknowledged that the Japanese maker has been facing an unexpected assortment of problems, in recent months, from quality snafus to recalls to slumping sales.
But Carter said the company is ready to “go on the offensive,” and confirmed Toyota Motor Sales USA – which also represents the Lexus and Scion brands — will spend a record $1 billion on marketing and advertising efforts during the fourth quarter of the year.
That could position Toyota nicely if the industry begins its slow recovery, as Carter forecast it will in 2010. The current year will likely wrap up with sales of no more than 10.4 million vehicles, said the executive, but he forecasts volumes should grow “by about a million” in 2010.
“Normally, there’d be no high-fiving over an 11 million market,” Carter quickly added, “but coming off this year, that will look like a party.”
The ongoing recall of more than 3 million Toyota products is expected to take some time to complete, Carter cautioned, the company still having to come up with replacement mats that won’t come lose and potentially cause more problems.
But that’s only one of the headaches the company has been facing, in recent months. There have been problems with quality, on some models, such as the big Tundra pickup, which also has fallen far short of sales expectations.
A former Toyota attorney, meanwhile, has gone public, claiming the automaker has withheld evidence from owners in product liability suits.
Carter insisted that, on the whole, “the average consumer on the street has little or no awareness,” of such matters, though he didn’t deny that Toyota’s image has taken a bit of tarnishing, on the whole.
The company has, like its rivals, been hard hit by the recession, at times posting sales declines of more than 30%. October should bring a bit of relief, he said, when the final figures are released. Carter hinted sales for the month “will be up by single digits compared to last month, but down by single digits compared to a year ago.”
Head of what is arguably Toyota’s largest and most powerful unit, Carter said that during the depths of the recession, the division had to “go on the defensive” like everyone else, but is now “going on the offensive,” with the goal of both growing sales and gaining share in 2010. The automaker expects to reach 16.2% for October, up almost two share points.
The offensive got underway during the fourth quarter, Carter reluctantly confirming a figure that leaked out from dealer meetings last month. The various Toyota brands expect to spend an amount that “exceeds $1 billion” on marketing and advertising in the U.S. during the final three months of this year.
The wide-ranging discussion also covered Toyota’s plans to “electrify” its product line-up. Earlier this year, the automaker had taken a surprisingly cautious position about expanding beyond its line-up of conventional hybrid-electric vehicles, such as the Prius, which now control 73% of U.S. hybrid sales. Carter and other officials said they were not planning to expand into plug-in hybrids and electric vehicles, citing concerns about the lithium-ion batteries needed to power those vehicles.
“The problem was finding a way to produce lithium batteries in large quantities and with consistent quality, but now we’re getting close,” said Carter, as explanation for the Japanese giant’s change in direction.
He noted that Toyota plans to produce its first plug-in hybrid by the end of next year, a version of the Prius that will be able to go up to 12 miles on battery power alone at speeds up to 62 mph. Initially, just 500 will be built for fleet testing, but if that’s successful, the Prius plug-in will go retail and, Carter suggested, other PHEVs will follow.
So will pure battery-electric vehicles, or BEVs, the first of which Toyota will retail in 2012, according to Carter. “As the market fragments,” with the addition of a variety of new green powertrain technologies, he stressed that “it will be up to automakers to educate consumers as to the right vehicles for them to use.” Carter noted that since he lives just a few miles from work, a plug-in Prius would be perfect for him, though his boss, with a 40-mile commute, would be better off with a conventional Prius hybrid.
Carter said he was skeptical about some forecasts that battery vehicles could account for a full 10% of the American market by 2020, warning that still more improvements to lithium-ion technology would be needed before that could happen.
But he asserted his belief that American motorists – particular Gen-X and Gen-Y buyers – will continue switching to smaller, greener and more fuel-efficient vehicles in the years to come.
That should be good news for the Japanese maker’s youth-oriented Scion division, or would be if Toyota can reverse a “significant” downturn in the brand’s sales. Carter said he believes the decline is the result of not bringing enough new Scion products into showrooms, the last couple years. That, he stressed, is a problem Toyota plans to fix in the next couple years, not only updating existing models but expanding from the 3-model strategy that Scion has followed since it was first introduced.