Toyota apologizes to European customers before unveiling new cars at Geneva Auto Show

By Colleen Barry, AP
Tuesday, March 2, 2010

Toyota apologizes to European consumers at show

GENEVA — Toyota Motor led the launch of its new global hybrid Auris compact on Tuesday with an apology for the massive global recalls that have stained its reputation for quality.

“First of all, we would like to apologize to customers for any inconvenience,” said Andrea Formica, Toyota Europe vice president, first confronting consumer concerns before unveiling the new products that are the lifeblood of any carmaker.

Quality, long Toyota’s hallmark, was purposely underlined in the face of the recall of 8.5 million vehicles worldwide, including nearly 2 million in Europe: “All the vehicles currently being produced meet the highest safety and quality standards,” Formica said.

The Auris is based on Toyota’s Hybrid Synergy Drive powertrain, with the automaker’s plans to expand to its entire model range by 2020.

Toyota’s luxury brand Lexus also launched the new Lexus CT 200h, the first hybrid in the European premium compact segment.

“It’s designed with Europe in mind, but will be sold worldwide, after entering production toward the end of the year,” said Andy Pfeiffenberger, Lexus vice president for Europe.

Toyota’s worldwide damage control campaign has been overshadowing its business as usual. On the eve of the auto show press opening, Toyota Vice Chairman Kazuo Okamoto’s issued an apology to European customers for its safety issues and the concerns they have caused, following public apologies by Toyota President Akio Toyoda in China and the United States.

Analysts say Toyota must do more than show appealing new products to win back customers. It will have to persuade consumers it is taking steps to identify all safety issues and correct them and any systems.

Okamoto pledged that the automaker is “taking a fresh look at every process in our operations,” including design, manufacturing, sales and service.

Toyota has issued global recalls totaling 8.5 million vehicles since October for sticky gas pedals, faulty floor mats and glitches in braking software.

Although it is the world’s largest automaker, Toyota’s position is far less dominant in Europe than it is in the United States.

The Japanese automaker has just a 5 percent market share in Europe, home to a very fragmented market with many national brands winning favor with domestic consumers, like Volkswagen in Germany, Fiat in Italy and Citroen and Renault in France.

Speaking later to reporters, Okamoto said Toyota never set out to become the world’s largest automaker, and the company viewed the achievement as consumers’ response to Toyota’s quality. But he acknowledged the recalls have forced a rethink not on the company’s size but its response.

“From now on, when we have customers coming to us to say we want to have your car delivered to us, maybe now we will ask them to be more patient so we will really give them optimal quality,” he said.

Among the underlying issues that have emerged from Toyota’s quality issues is that the automakers’ regional entities did not communicate enough with each other to allow earlier identification of issues.

Toyota Europe CEO Tadawshi Arashima said new regional committees with powers to issue their own recalls will give Europe more autonomy. About 20 European executives will be on the company’s new special committee for global quality, chaired by Toyoda.

There’s no question that European sales will be hit, Arashima said, but it is difficult to forecast how much. Not only will the figure be impacted by the recalls, but they will be hit by the discontinuation of scrappage incentives in Europe. Italy, Greece and Germany all have ended theirs, while France is phasing its out.

“The people will come back or not, based on the way we treat the problem,” said Didier Leroy, head of sales and marketing in Europe. One key is allowing customers to quickly identify if their car is one with a problem, and then getting problems fixed as quickly as possible.

Out of 1.7 million cars recalled in Europe in late January for sticky accelerators, 200,000 have been fixed, Leroy said. And of the 42,900 Prius whose brake software is being replaced, Toyota Europe has changed the software in 15,000.

Leroy said Toyota’s European sales were “not so good” in February, due to the impact of the recalls, which tied up Toyota deliveries for up to a week in some places, as well as uncertainty surrounding whether scrapping incentives would be extended in Italy and Greece — where ultimately they were not.

Sales are also way down in Germany, where Leroy said the trend is pointing to a slide in sales of 1 million this year, from 3.7 million to 2.7 million.

Analysts expect car sales in Europe overall to be down by 2 million this year.

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