Image: Toyota returns to profit on cost-cutting, increased sales
Toyota’s President Akio Toyoda, left, speaks during a press conference at the company’s Tokyo headquarters Thursday.
updated 6/24/2010 9:43:46 AM ET 2010-06-24T13:43:46

Toyota Motor Corp. President Akio Toyoda bowed deeply and apologized to shareholders Thursday for the troubles caused by massive global recalls of the company's vehicles.

Toyoda was facing shareholders for the first time since the Japanese automaker's reputation for quality was damaged by the recall crisis that started last October.

Again bowing deeply after the remark, Toyoda also said the company was doing its utmost to improve quality control and thanked shareholders for their support.

"I apologize deeply for the concerns we have caused," he said. "We believe our most important task is to regain customers' trust."

The shareholders' meeting was closed to the media, but the proceedings could be seen in a TV monitor in another room at Toyota headquarters in the city named after the automaker. Atonement for Japanese company heads typically comes as a deep bow held for several seconds to show heartfelt remorse for wrongdoing.

Toyota, the world's biggest automaker, has been working to patch up its reputation after more than 8 million vehicles were recalled worldwide over reports of unintended acceleration and other defects.

U.S. authorities slapped Toyota with a record $16.4 million fine for acting too slowly on the recalls. Toyota dealers have repaired millions of vehicles, but the automaker still faces more than 200 lawsuits tied to accidents, the lower resale value of Toyota vehicles and the drop in the company's stock.

Although the recall debacle hung over the shareholders' meeting, the statements from Toyoda and other officials were met with polite applause. A handful of shareholders shouted their anger.

The region where the automaker is headquartered is packed with Toyota plants, suppliers and other businesses like hotels and restaurants that are heavily reliant on Toyota and fiercely loyal.

"The company stumbled badly over the recalls, and it became a big problem," said one shareholder, who identified himself only by his surname Nishikawa.

He also expressed hopes Toyoda as the "face of the company" will handle the recall problem bravely, without breaking into tears, referring to a widely reported meeting that a tearful Toyoda had with dealers in the U.S. where the recalls were concentrated.

Others asked about Toyota's strategy for green vehicles and how it planned to expand in emerging markets, including dealing with labor strife that has temporarily shut down production n China.

Toyota Executive Vice President Satoshi Ozawa said recall-related costs for the fiscal year ended March totaled 380 billion yen ($4 billion).

Executive Vice President Shinichi Sasaki acknowledged that Toyota had failed to fully understand the feelings of customers about safety.

Toyota Motors President Akio Toyoda bows to conclude his press conference announcing the company's earnings at its Tokyo headquarters.
But he said the company was working harder to beef up quality controls, including appointing outsiders to assess the company's transparency, and finding out more how drivers were using Toyota vehicles.

"We want to make Toyota No. 1 in quality from the customers' viewpoint," he told shareholders.

Toyoda said directors on the board will forego their bonus payments for the second year in a row. Directors didn't get bonuses the previous year after Toyota reported the worst losses in its history as the financial crisis sent auto sales plunging.

That won the approval of at least one shareholder, who pointed out the contrast with Japanese rival Nissan Motor Co., which disclosed at its shareholders' meeting Wednesday that Chief Executive Carlos Ghosn had received $9.5 million in compensation.

Analyst opinion has been mixed about Toyota's prospects, which remain shaky and depend on a global auto recovery.

"I'm not that pessimistic. I am hopeful the world's economy is going to grow happier," Nomura Securities Co. auto analyst Shotaro Noguchi said in a telephone interview.

"The image that Toyota cars were dangerous got serious three months ago so that even kids knew about it. But people forget and that has changed," he said.

Toyoda pointed to his striking a deal last month with Tesla Motors Inc., a U.S. electric car manufacturer, to open an electric car plant at the site of Toyota's former venture with General Motors Co. as an example of how Toyota will start anew.

In April, Toyota closed the California plant, called New United Motor Manufacturing Inc., or NUMMI.

He promised Toyota will continue to grow, but without pursuing size for size's sake.

"Our company is about doing the right thing in the right way," he told the meeting. "And I like to think we are the kind of company that cares about people's feelings."

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