Supply trouble, stigma of recall plague Toyota

Associated Press

DETROIT

Toyota should have owned the road this summer. When gas prices go up, American drivers go for smaller, fuel-efficient cars. The last time prices at the pump spiked in 2008, Toyota captured the title of world’s No. 1 automaker — and has held it ever since.

Now gas costs almost $4 a gallon again, but Toyota is struggling. It’s been hammered by supply disruptions from the Japan earthquake and can’t escape the stigma from its safety-related recalls last year. And its rivals are making flashier cars with great gas mileage.

Toyota said Wednesday that its quarterly profit fell more than 75 percent, mostly because of production problems from the March 11 quake and tsunami. The automaker’s CEO, Akio Toyoda, said executives are “gritting our teeth” to keep jobs in Japan.

In the United States, Toyota is losing market share faster than any of its competitors, falling to 14 percent from 17 percent in a little more than a year. North America is Toyota’s largest market.

Meanwhile, Ford, Nissan, Kia and Hyundai all have introduced sexier, more- chiseled designs. General Motors and Chrysler, out of bankruptcy and healthier than they have been in years, are gaining market share, too.

By its own admission, Toyota lost sight of quality in its pursuit of global sales. Analysts expect GM to retake the world sales title this year.

“They lost their way,” said Aaron Bragman, an analyst with the consulting firm IHS Automotive. “They wanted to be GM. But they lost what made them a valued brand and a valued company.”

For decades, Toyota’s strength was reliability. Other cars may have been flashier or cheaper, but Toyotas were high-quality and retained their value. Then Toyota recalled 14 million cars and trucks last year because of faulty gas pedals and other problems.

In a J.D. Power and Associates study of vehicle quality, it slipped to sixth place in 2010 from third place in 2009. The study measures problems experienced by the original owners of vehicles after three years.