Toyota may face long, hard recovery

By Jerry Hirsch/Los Angeles Times

LOS ANGELES – Toyota still faces major hurdles in rebuilding its image and market share even though a federal study found no evidence that electronic defects accounted for sudden acceleration in its vehicles.
The results of a study conducted by NASA engineers were welcome news for Toyota Motors Corp., but it doesn’t change the biggest problem the world’s largest automaker faces – the lack of dynamic products at a time when competitors are coming out with greatly improved cars, analysts say.
“Customers are walking away with the perception that even though a Toyota is well built, they don’t see it as the next step in design, styling and innovative features,” said Alexander Edwards of Strategic Vision Inc., an automotive research and marketing consulting firm.
For the first time in years, the Ford and Chevrolet brands are outselling Toyotas. The Japanese automaker is losing market share and has had to offer incentive after incentive on its vehicles, which were once among the least discounted in the industry.
Toyota’s share of the U.S. auto market fell to 15.2 percent last year from 17 percent in 2009, hampered by the recall of millions of vehicles, and the record payment of nearly $50 million in federal fines for failing to promptly inform regulators of defects in its vehicles and delaying recalls. It was the only major automaker to log a sales decrease from 2009.
Bob Carter, the automaker’s group vice president and general manager, acknowledged that the tumult over the sudden acceleration incidents and the long string of recalls made for “a challenging year for Toyota.”
The company is responding with a flood of new products and will launch a new advertising campaign this month that reminds consumers that it remains the top retail car brand in America, he said, adding, “You are now going to see a relentless focus on our product.”
Toyota plans to introduce seven new or refreshed vehicles during 2011, including the new Prius V station wagon. Many analysts expect Toyota to also unveil a new Camry.
Others aren’t convinced they will be enough to bring shoppers back to Toyota’s dealerships.
The problem for the Japanese automaker is that competitors are improving reliability and styling, especially in the subcompact and family sedan segments of the market that have long been Toyota’s bread and butter.
Toyota’s Corolla and Camry models accounted for more than a third of the company’s U.S. sales last year. Although they remain among the bestselling vehicles in America, analysts say new rivals are eating away at their market share.
The Corolla is not expected to get a full redesign until the 2014 model year, and although it still gets top fuel economy, its styling and features have fallen behind new entrants such as the Hyundai Elantra, the Ford Focus and the Chevrolet Cruze, said Dave Sargent, vice president of vehicle research at J.D. Power & Associates. And a new version of the top-selling vehicle in that segment – the Honda Civic – comes out later this year.
“The competition is very tough,” Sargent said.