Toyota's chief apologizes to Chinese customers

/ Source: The Associated Press

Toyota President Akio Toyoda apologized Monday to customers in China for the company's quality problems and emphasized the importance of the fast-growing market to his company.

Toyoda said he flew straight to Beijing from the United States to show his sincerity to China's customers. He faced a grilling last week in Washington by angry U.S. lawmakers about Toyota's recalls over sticky gas pedals, faulty floor mats and glitches in braking software.

"The Chinese market is very important, so I flew here in person in the hope my personal expression of an apology and explanation will give customers some relief," Toyoda said at a news conference. He apologized four times during the one-hour event.

Toyoda's decision to make China his second foreign appearance reflected the importance of its market as sales lag elsewhere and the sensitivity of Japanese brands in a country where nationalists are still angry over Japan's wartime aggression.

China overtook the United States last year as the biggest auto market with a 48 percent jump in sales. Automakers are looking to China to offset weak demand in traditional markets and to drive future growth.

China's state-run media have made only muted comment on Toyota's recalls, in contrast to the blistering criticism Toyoda faced from American lawmakers.

Toyoda's apology should help to restore consumer confidence, said Zhang Xin, an industry analyst for Guotai Junan Securities in Beijing.

"For Chinese people, Toyoda has shown sincerity, and the size of the recall is not that big," Zhang said. "So as long as they can ensure quality in the future, they can make a comeback."

Toyota recalled 75,522 RAV4 sport-utility vehicles in China in late January — a small percentage of the 8.5 million vehicles pulled worldwide since October.

Toyoda said he will lead a new global quality committee that will have a chief quality officer from each region, including China. He repeated earlier comments that, with his family name on the company, he was personally responsible for safety.

"The incident had caused an impact and worries to Chinese consumers," he said, speaking in a calm, measured voice. "I hereby express my sincere apologies for these worries."

Toyoda met earlier Monday with Commerce Minister Chen Deming, according to a ministry press official, Chen Rongkai. Chen said he had no details of the meeting.

Asked why so few vehicles were recalled in China and whether that meant Toyota was discriminating against Chinese customers, Toyoda said the other vehicles sold in this country did not use components that led to recalls.

Shaken confidence
The flood of recalls in the United States has shaken confidence in Toyota's reputation for excellent quality.

But in China, Toyota's sales with two local joint venture partners were up in February from a year earlier, according to Passenger Car Association estimates. Sales for its venture with Guangzhou Automobile Group climbed 50 percent to 17,500 units. Sales at its FAW Group venture jumped 106 percent to 40,400 units.

"So far, it's hard to see any direct impact on Toyota's sales," said Rao Da, general secretary of the China Passenger Car Association, an industry group. "The crucial thing for them is brand reputation. If they don't pay great attention to this, it will eventually hurt the customers' trust."

A spokesman for Toyota China, Niu Yu, said monthly sales figures would be released Tuesday.

At a Beijing dealership, the Wu Fang Qiao Toyota Sales & Service Co., sales of the RAV4 are down while Camrys and Corollas, which were not part of the recent recall in China, are selling well, said a salesman, Liu Jinxin. He said he had no exact figures.

"There is certainly an impact on Toyota's sales here because even kids today know about the incident. There are a lot of people calling us and asking questions," Liu said.

Toyota got a relatively late start in China, after fitful efforts to break into the market using tie-ups between its subsidiary Daihatsu Motor Co. and state-run Tianjin Automobile Industry Holding Co.

Toyota rolled out its first made-in-China Camry in May 2006.

Sales growth lagged other foreign brands last year due to Toyota's focus on bigger cars while the government promoted smaller vehicles with tax breaks and subsidies. Toyota sales rose 50 percent, compared with 76 percent for Volkswagen AG and 219 percent for General Motors Co.'s Chevrolet unit.

Toyota is preparing to launch a lower-cost brand for China in response to demand for smaller cars, according to analysts.

In August, its joint venture with FAW recalled nearly 690,000 Camry and Yaris passenger cars after finding problems with electric window controls. There was no apparent effect on sales.