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Tense times in Toyota City

The Japanese carmaker's corporate home town is reeling from recession and recalls.

March 04, 2010|By John M. Glionna

Reporting from Toyota City, Japan — For 31 years, Genichi Miyagawa has been a soldier behind enemy lines: He sells Suzuki automobiles in the corporate heart of Toyota territory.

Owning a competing dealership here has never been easy. Back when Toyota was riding high, Miyagawa would stand in his deserted showroom gazing enviously across the road as buyers flocked to purchase this loyal city's namesake brand from a rival dealer.

But now the once-mighty Toyota machine has sputtered. The automaker is embroiled in an embarrassing worldwide recall, its corporate image muddied with charges of slipshod workmanship and even a possible cover-up involving safety defects in its vehicles.

On Tuesday, a report on the carmaker's slumping U.S. sales brought more bad news: Toyota in February sold 9% fewer cars in the U.S. than it did the same month a year ago; sales of the popular Camry plunged by nearly 20%.

Still, Miyagawa isn't cashing in on his competitor's misfortunes. He says he'd never stoop to running gotcha ads that taunt Toyota with jabs about alleged poor quality and safety.

The man who considers himself Mr. Suzuki isn't gloating. He's scared.

"I don't just sell cars here, I live here," said the balding 60-year-old. "These Toyota people are my neighbors. And we all know that if that company crumbles, this entire town will go tumbling down."

Since Toyota officials first announced a widening series of recalls last month, this self-proclaimed car capital of Japan is reeling from a dose of civic depression.

When news of the unintended acceleration problems first broke, Toyota management here suggested that the troubles were due to driver error. Taxi driver Toshio Okamura said he believed that explanation.

"It was hard to imagine," he said of the mechanical problems. "This is Toyota. These things don't happen."

Now Toyota has admitted problems with its cars. And a U.S. lawmaker has alleged that the company may have deliberately withheld evidence in lawsuits relating to vehicle safety.

"Even now that the real facts are surfacing, I can't accept it," said Okamura. "I think many people here are struggling to accept it."

In Toyota City, located 150 miles south of Tokyo, old allegiances die hard. Once named Koromo, the community in 1959 changed its name to mirror that of its largest employer. A half-century later, 80% of laborers here work in the automotive industry.

The place has gasoline in its blood, thanks to the doting multinational car firm that pays generous wages and showers the community with perks such as a top-notch sports stadium, concert hall and art museum -- all carrying the Toyota brand name. Hearts here swelled with pride in 2008 when Toyota overtook troubled General Motors Corp. to become the world's No. 1 automaker.

But like other company towns, this one's fortunes rise and fall with those of its biggest industry. The recent worldwide economic crisis hit Toyota hard -- and Toyota City got walloped.

Unemployment skyrocketed. City officials last year saw a 96% drop in corporate tax receipts. The Aichi prefecture government, which relies on Toyota for one-fourth of its corporate tax revenue, suddenly faced a big hole in its budget.

Still, with the global economy on the mend, things were starting to look up in Toyota City. Then came news of the recalls, along with scores of accidents and motorist deaths alleged to be caused by sudden acceleration in Toyota vehicles.

Now reporters are descending on Toyota City, asking troubling questions about the company that has always held bragging rights over sales and quality. At supermarkets, cafes and bus stops here, the debate is over how fast Toyota can rebound from its public relations disaster.

At one restaurant that caters to Toyota workers and sales representatives of foreign companies doing business with the company, the mood was buoyant.

"We're not worried," said retiree Fumiyuki Yumemura, "even though the U.S. Congress is trying to capitalize on Toyota's bad news. It's just more Japan bashing."

As the world's most successful automaker, he said, Toyota must now expect such attacks. "Tiger Woods has shown us that being on top is a very hard job," said Yumemura, a gray-haired man in his mid-60s. "Everyone tries hard to point out your mistakes. Chasing No. 1 is an easier life."

Insurance saleswoman Junko Ida used a Japanese proverb to describe Toyota's fate: The nail that stuck out is being hammered down. "But the nail will rise again," she said.

There's one place in town where few people dare to express any opinion at all about Toyota: At the automaker's fortress-like headquarters, discussion of the recalls comes only in whispers.

"Toyota workers were the last to know about the recalls. The company didn't say anything to us until after they made all their public statements. We learned about it in the press," said Hiroshi Oba, a veteran assembly-line worker and union activist.

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