In 2020, Toyota Motor became the largest auto concern on the planet. The share of Russia in its global sales is small – only 1.62%, but in our country this brand is both popular and significant: with revenue of 263.9 billion rubles, Toyota ranks eighth in the ranking of 50 foreign companies in Russia and is one of the three largest sellers cars. Forbes tells the story of a legendary company.
On the ruins of the railways
At the beginning of the 20th century, Japan was one of the fastest growing economies in the world. The country underwent rapid reforms, industry grew, the railway network covered the entire country, and the banking sector developed. The process was tightly controlled by the government, which determined the strategic directions for the development of industries, allocated subsidies and, almost in a state plan manner, set tasks for industrial groups, deciding which areas of the economy should be developed. But until 1923, the auto industry completely dropped out of the attention of the government of the country and large industrialists: it was believed that rail and sea transportation could handle the transportation of goods, and personal transport was a whim that was not worth attention. Single prototypes of cars appeared, but the matter did not reach large-scale production: for example, the first Japanese production car Mitsubishi Model A (a copy of one of the FIAT models) was produced in 22 copies.
The situation was unfolded by the Great Kanto Earthquake of 1923, which killed between 140,000 and 160,000 people – more than the nuclear bombing of Hiroshima. It destroyed not only the two largest cities of Yokohama and Tokyo, but also the railways on the shores of Tokyo Bay; the authorities found that they were unable to quickly evacuate the victims, bring up rescuers and food, and then rebuild the regions.
To avoid similar problems in the future, a motorization program was adopted – primarily with an emphasis on trucks and buses. During the 1920s, with full government support, assembly plants for Ford, GM and Chrysler appeared in the country. In 1930, about 20,000 cars a year were produced in Japan, and then the imperial government decided that the foreigners had done their job, it was time for the Japanese to become masters in their car industry. In 1931, protectionist measures began to be introduced to develop the national auto industry. Two years later, on September 1, 1933, an automobile division was opened at Toyoda Loom Works, renowned for its textile machines.
The carpenter’s son Sakichi Toyodu is sometimes called the Japanese Edison in biographies. At the turn of the 19th and 20th centuries, he made several breakthrough inventions. Among them is a loom that automatically stops when the supplied thread breaks, and then a fully automatic motorized loom. Interestingly, the principle of jidoka formulated by him – automatic stopping of work when any problems arise on the production line – is still one of the pillars of Toyota’s production culture. By the mid-1920s, Sakichi Toyoda co-owned textile factories in Japan and China, which he merged into Toyoda Automatic Loom Works. The business was built according to the clan principle: the company was directly managed by Sakichi’s son-in-law Rizaburo Toyoda, and the son of the founder of the business, Kiichiro, studied engineering abroad. Rizaburo Toyoda, who took over the family business after Sakichi’s death in 1930, decided to invest the money from the sale of a license to manufacture machine tools in an automobile production. It was headed, of course, by Kiichiro Toyoda.
The first development of Toyota (in the spelling of the company and the brand replaced one letter to make the pronunciation euphonious) was a six-cylinder 3.4-liter engine, copied from the Chevrolet engine of 1929. The power and dimensions of the engine made it possible to install it both on passenger cars for the retail market and on light trucks: the company received a government order for 3,000 trucks. Equipped with this engine and released in the mid-1930s, the Toyota AA passenger car and G1 truck borrowed designs from Dodge and Chevrolet. By this point, the Japanese government had pushed American manufacturers out of its market, and the first Toyota plant, commissioned in 1936, was rapidly ramping up production. By the beginning of World War II, Toyota Motor, which became an independent company in 1937, was already a major supplier of trucks for the state and the army. In addition to trucks, she built amphibians and the first off-road vehicles of its own design.
The war destroyed the Japanese economy, but Kiichiro Toyoda managed to get a contract from the US Army to repair automobile equipment, and soon local manufacturers were allowed to resume production of trucks. In 1947, Toyota brought to the market its first post-war passenger car, the Toyota SA, in which many of the technical solutions of the German Volkswagen Beetle were copied.
Still, it was hard work to keep the company afloat until 1950: government efforts to curb post-war inflation led the country into a financial crisis that pushed Toyota and other automakers to the brink of collapse. The government and the Bank of Japan gave the company large loans for restructuring and developing new models, but one of the conditions was a change in leadership and the resignation of Kiichiro Toyoda. The actual founder of the company, honored at home and a place in the US Automotive Hall of Fame, died in 1952, just two years after his retirement. The new head of Toyota was his cousin Eiji Toyoda, who was destined to lead the company for almost half a century (he finally retired only in 1994 and died at the age of 100 in 2013) and make it a transnational giant.
On the slope of Mount Fuji
In June 1950, the first Korean War broke out, in which the Republic of Korea was supported by a coalition of Western powers led by the United States. The Americans were still based in occupied Japan, and Toyota received an order from them for 1,000 trucks, and a year later the company submitted the Toyota Jeep BJ SUV to a competition organized by the Reserve Police Corps of Japan – a model built on a platform of its own design, a car based on the American military Willys MB. Three Japanese “Willys” came together in the competition: a model from Toyota, an SUV Mitsubishi, which bought a license from Willys, and exactly the same car from Nissan, which did not buy a license, but simply disassembled and copied Willys by its design bureau. Mitsubishi won, but Toyota was also in the spotlight: to demonstrate the car’s abilities, the testers staged a “ascent” to Fujiyama on it. Toyota Jeep BJ climbed to an altitude of 2400 m (it was not possible for others), and the company received an order for 300 vehicles for the police, forestry service and other government agencies. True, it soon became clear that the company did not have any rights to the word Jeep, and the car was given a new name, coined by the technical director of the company, Henji Umehara: Toyota Land Cruiser (he himself claimed that the idea was born by analogy with the British Land Rover). Since then, the two brands have become bitter rivals, first on the off-road, and after a few decades in the luxury SUV market. Over 70 years, more than 10 million of all Land Cruiser modifications have been sold in the world; now the SUV is sold in 170 countries of the world with 400,000 vehicles annually.
The “Japanese Economic Miracle,” a boom that began in the Japanese economy in the early 1960s, made car purchase affordable for the masses. Together with other local manufacturers, Toyota focused on the production of compact cars: in 1966, the first generation of the Toyota Corolla was released – a small family car that was destined to become one of the most massive cars in the history of the automotive industry.
In the mid-1960s, the company entered the American market with the Corona sedan that was already on sale in its homeland by that time – the car only replaced the engine to please the residents of the United States who were accustomed to powerful motors. The main weapon of the company on a foreign continent was cheapness, and by the end of the decade the brand became the third-best selling among foreign manufacturers in America. The energy crisis of the early 1970s dramatically changed the situation. The jump in gasoline prices forced Americans to abandon the powerful and gluttonous Chevrolet and Buick in favor of the economical “Japanese”. And then voters from Detroit and other industrial cities remembered how American cars were thrown out of Japan in the 1930s, a wave of anti-Japanese demonstrations swept across the country, and the American Congress was forced to consider issues on limiting the access of Japanese cars to the US market.
Toyota, along with other Japanese automakers, agreed to voluntarily restrict vehicle shipments to the United States, but at the same time began negotiations with Ford and GM to build joint car assembly plants. In return, the company offered Americans access to subcompact engine designs and compact Japanese cars. Consent was obtained from GM, and in the early 1980s, the construction of a joint venture NUMMI (New United Motor Manufacturing Inc.) began in California. An important project for the company was led by one of the clan representatives, the youngest son of the founder, Tatsuro Toyoda.
In 1981, Eiji Toyoda stepped down from direct management of the company, taking over as chairman of the board. His last idea, which was destined to be embodied by his successor, was the creation of the Lexus brand – a premium version of Toyota. It was developed for sales in the American market, but in the 1990s it captured the whole world. Eiji handed the reins of power to the eldest son of the founder of the company, Shoichiro Toyoda.
Although Eiji Toyoda succeeded in making the company the largest in Japan and one of the world’s largest automakers and established a renowned quality control system, Toyota remained extremely conservative in many ways. Its passenger division produced mainly small and medium-sized rear-wheel drive cars, which by the end of his reign was already becoming an anachronism. Therefore, the 1980s and 1990s were spent not only on expanding the international expansion of the company, but also on creating a range of new models of various classes. The luxurious Lexus was followed by the equally luxurious T-100 pickup, later renamed the Toyota Tundra, the Toyota Camry front-wheel drive business model, the sporty MR2 and Supra. Now the electric Tesla created by Elon Musk is considered to be a symbol of environmental friendliness and new technologies, but the first mass car that began to change the rules of the game in this direction was the Toyota Prius with a hybrid (gasoline plus electric) engine, which entered the market in 1997. In 2002, the once conservative company even started taking part in Formula 1 races.
In 2007, Toyota opened a car assembly plant near St. Petersburg, which produces the Camry sedan and the RAV4 crossover. Last year Toyota sold 91,598 new cars in our country – like many other manufacturers, its revenue in Russia decreased significantly, falling by 11.75%. In the global market, its sales fell by 11.3%, while Toyota won first place in sales from Volkswagen in 2020, having sold more than 7.5 million vehicles.
Whether a company will be able to retain its leadership largely depends on how quickly it follows global trends. Toyota executives have repeatedly expressed skepticism about the future of an electric vehicle. However, Toyota set up an electric truck business with subsidiaries Hino and Isuzu this year. Now the conservatism of the company favorably distinguishes it in the eyes of buyers from many manufacturers who, in pursuit of low fuel consumption and environmental friendliness of exhaust, have gone to reduce the resource of their cars: cars, as customers complain, become “disposable”. But that’s not about Toyota. “A person who buys our car must be sure that it will not let him down even after 150,000 km. Let this reliability be appreciated not by the first, but by the second owner! We do not necessarily strive to be the first. The main thing is not to deviate from the principles. We’ll go back to our roots, ”says current Toyota President Akio Toyoda, great-grandson of the founder of the family business and grandson of the creator of the world’s largest automaker.
This is the last text by Kirill Gorsky for Forbes. 2005 to 2013 he served as deputy editor-in-chief of the Russian version of Forbes, passed away on September 19.