The good news for Toyota is that report from the U.S. Department of Transportation that has found no major underlying issues with the electronics system in the unintended acceleration problem. This is something Toyota has maintained. The company raised its earnings forecast for the fiscal year ending March 31, partly due to increased sales in Asia and a hoped for increase in sales in the U.S. To do this, Toyota must regain the trust of its customers. They will need to keep a watchful eye on quality, but it cannot abandon its innovation efforts. It’s a problem almost all companies face:balancing cost savings, ensuring quality, and bringing new offerings to the market. It was, after all, an attempt to save costs that got Toyota in its current predicament. There’s also the factor of the stronger yen, of course, but that is not part of this discussion.
Toyota first built its reputation on quality. That trust enabled it to move into new areas, such as hybrid cars, and find market acceptance. And given the damage it suffered a year ago, it’s made a remarkable recovery. So how should it move ahead? Firstly, it needs to ensure that quality is established across all makes and models. It can continue to look for cost savings, but must do so without sacrificing that baseline set of customer expectations. Secondly it should look for features that are no longer relevant, that customers no longer care about, and use this as a basis for cost cutting features. It should continue to find customized solutions for the Asian market. Finally it should look for points of innovation across its portfolio, particularly in its eco-friendly cars. Remember when Prius owners the few and proud? Now hybrid cars seem old hat. Ford and Chevy are providing their own strong competitive offerings. So Toyota has to discover the next thing that is missing for its customers for its Prius customers. And it should continue its role as a auto technology innovator. All this easier said than done. But as I said, it’s a common challenge, and one best looked at from the portfolio view, rather than by each individual product line.