Shoichiro Toyoda, president of Toyota Motor from 1982 to 1992 and chairman from 1992 to 1999, passed away February 14. He was 97.
Dr Toyoda (he held a doctorate in engineering and everybody called him doctor) was one of the first auto executives I interviewed upon moving to Japan in the mid-1980s.
Little did I realize then that I was in the presence of one of the auto industry greats. He would be inducted into the Automotive Hall of Fame in 2007, the eighth Japanese so honored.
We began by discussing trade, then and now a hot-button issue.
In 1985, Japan had exported a record 6.7 million vehicles, including 3.1 million to the US, also a record high. Toyoda, son of Kiichiro Toyoda, the founder of Toyota Motor Corporation, was company president. He had held previous positions including president of Toyota Motor Sales, executive vice president and senior managing director.
Japanese automakers had agreed in 1981 to limit exports for several years to give American manufacturers – who had reported record losses the previous year – time to prop up their businesses. The 1979 energy crisis and the recession that followed hit Detroit hard as the Big Three couldn’t compete with the Japanese in small fuel-efficient cars.
Export quotas were characterized as “voluntary.” In fact, they weren’t. Japan’s powerful international trade and industry ministry, MITI, proposed them and threatened the industry with a cabinet order to implement them if the industry refused to comply.
The industry complied, but in the end found a way to partially skirt the agreement by boosting shipments of pickup trucks.
I pressed Toyoda about Japan’s growing trade surplus. US imports, trending in the opposite direction of exports, fell in 1985 to the lowest levels since the early 1960s, while in dollar terms the Japanese surplus would grow to then-historical highs following the 1985 Plaza accord in which key finance ministers agreed to devalue the US dollar.
He disagreed with my premise that Japan was doing something improper. Polite but firm, he pointed out that, “the reasons for keeping the export restraints have disappeared,” citing the apparent “recovery” of the US auto industry and reduced unemployment levels.
He also advised against relying too heavily on exchange rates to bring trade into balance. “The US trade deficit results from many factors,” he warned – including, it turned out, the relative price inelasticity of Japanese cars in the US market.
With the advantage of hindsight, I can see of course that Toyoda was right about most of the issues we discussed. By the 1980s, the Big Three weren’t really interested in selling cars in Japan. They wanted Japanese automakers to reduce their sales in the US. That was their bottom line.
And although he didn’t predict it, the appreciation of the yen, following the devaluation of the dollar, made it cheaper for Japanese automakers to transplant more of their operations to North America and Europe. It was just arithmetic.
The most memorable comment from those interviews came when I asked him about Toyota’s “conservative” approach to management. Keep in mind the automaker was just gearing up for a major overseas expansion into North America and Europe, which would be one of Toyoda’s legacies.
He responded by quoting a Japanese proverb: “Ishibashi wo tataite wataru,” or, “Tap a stone bridge before crossing to make sure that it’s safe” – advice to be cautious. To press his point, he said, “Toyota no bai wataranai” (“In the case of Toyota we often don’t cross”). Then he laughed heartily at his own joke.
But the reality was different. Although following both Honda and Nissan into the US market as a manufacturer and Honda into Canada, Toyota would do it, as always, Toyota’s way (as a 2003 book about the automaker was titled), first entering in 1984 by way of a car-producing joint venture with General Motors in California. After gaining experience through the joint venture, Toyota would announce plans in December 1995 to invest $1.2 billion in North American production: $800 million in Kentucky and $400 million in Ontario.
Several years later, the automaker committed £700 million to build cars in the UK.
There was no turning back. And there was almost no limit to how far Toyota would reach into its deep pockets. The automaker eventually would invest nearly $31 billion in US and Canadian manufacturing, including $25 billion in the US, and more than $6 billion in Canada.
During Toyoda’s tenure as company president, global production grew from 3.2 million to 4.7 million units, with overseas production accounting for 16% of the total by 1992 when he handed the keys of management to his younger brother, Tatsuro. That overseas share now stands at 65%, virtually immunizing the automaker from exchange-rate fluctuations.
Also during his tenure, Toyota introduced the Lexus brand in 1989. And in 1992, before he moved from the presidency to the chairman’s spot, the LS 400, the brand’s flagship model, would score number one in both the JD Power customer satisfaction and initial quality surveys, beating all of the major European and American luxury brands.
I would have two more quality-time meetings with Toyoda. In 1994, I hosted him at a luncheon at the Foreign Correspondents’ Club of Japan. He had been newly appointed as chairman of the influential Japan Business Federation (Keidanren) and, breaking tradition, chose to give his inaugural address to the foreign press.
He made one request, actually a demand – that I not mention Toyota in my introduction, but say that he was representing “all” Japanese industry.
Rather than protest, since he wouldn’t have changed his mind, I played along and mentioned three or four times in my introduction that he was president of a “not-so-small company” in Aichi prefecture. He laughed, the joke on him this time. It was all in good fun.
Nearly 20 years later in 2012, we met again at a reception of Intelligent Transport Systems Japan, of which he was honorary chairman. He had been the driving force behind the ITS organization’s founding in 1994 when it was known as VERTIS – the Vehicle, Road and Traffic Intelligence Society. The organization’s focus: future driving systems, including autonomous vehicles.
He waved me over, and we would have a pleasant conversation focused in part on his son’s testimony before Congress two years earlier when Akio, still in his first year as Toyota president, would face probably the biggest crisis of his presidency involving the sudden acceleration of Toyota and Lexus cars and nearly 100 deaths in the U.S. alone.
Standing alongside Toyoda was Keiko Morita, the automaker’s longtime executive interpreter. Having watched the hearing in real-time and feeling that several members of Congress had crossed a line with their harsh treatment of Akio, I mentioned that she had saved the day by translating their questions fully into Japanese before Akio, who speaks English, would respond in Japanese. She then translated his responses back into English.
The net result: fewer questions, especially gotcha questions, and Akio would make no slips of the tongue.
At the time of his passing, Toyoda was still honorary chairman of the organization. He was also honorary chairman of Toyota.
He is survived by his wife and daughter in addition to son Akio, who less than three weeks before his father’s death had announced he would be stepping up to the chairman’s spot. Akio will remain as a representative director to help insure a smooth transition when Koji Sato takes over as president on April 1. Toyota has announced it will hold a memorial service on April 24 in Tokyo.
Roger Schreffler is a veteran of nearly four decades as a Japan automotive correspondent. He has represented Ward’s Automotive for most of that time, since the 1990s, and is a former president of the Foreign Correspondents’ Club of Japan.
He wrote this article for Ward’s, where it was first published. Asia Times is republishing it with permission from Ward’s and with slight changes by the author.