How did Toyota go from basket weaving to the world's largest car company?

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Answered by: christopher, An Expert in the Opinions and Editorials Category
To find out where Toyota can go, you really need to learn from where they began. They started as a company that created Toyoda Automatic Loom Works for commercial weaving applications, and Toyota Motor was a spin-off of the then larger loom division. The Japanese government commissioned them to begin producing cars for economic and militaristic purposes.

Here in the United States, Toyota started out as a producer of the off-road Land Cruiser over 50 years ago, and it's limited appeal in the States, with Jeep already well-established since WWII, almost prevented Toyota from planting a flag in the market.

Not only did Land Cruiser make it, but so did Toyota. From selling less than 500 Land Cruisers a year in the 50's, to over 2 million Toyotas in 2007, becoming the U.S.'s #2 automaker. Over 9 million Toyotas are sold worldwide, making Toyota the World's #1 automaker, not only in sales volume, but in efficiency of production, and the most profitable volume automaker today.


How did they become the World's largest car company? Simply, if not easily.

Through kaizen, the study of continuous improvement, and their legendary TPS (Toyota Production System), the company has sought out ways to accomplish many goals, in production and expansion, simultaneously. Sprinkle in ambition, market awareness, timing, strong marketing, and an outwardly humble approach, and you have a recipe for true greatness.

Toyota benefited by their lean, adjustable production systems, and ability to compete with each other to build reliable, efficient vehicles that the U.S. has sought since the oil embargo in the early 1970's. Toyota even even went so far as to commission then unknown J.D. Power to test their vehicles to find out how they related to the American market, and identify room for improvement. It turned out Toyota was among one of the worst cars makers sold in the United States when it came to vehicle quality!

These testing methods helped them work through the quality issues common on vehicles like Celica and Corona through the 70's and early 80's. By the mid-80's the Toyota Cressida, their flagship sedan, was consistently noted as the best built car sold in America, and Corolla was highly sought-after for it's efficiency and quality. Interestingly, Toyota and GM both worked together to develop American production plants, featuring some of the TPS system, and helping GM learn how to improve their vehicle quality as well.

Surprisingly, Toyota has developed the best production practices, and even conducts tours of their factories, which other companies execs frequent. Most of the TPS system is on display, but none have been able to copy, much less improve upon, the speed, efficiency, and flexibility of the system. Toyota has shown both generosity and over-confidence in such matters.

With Cadillac quality sinking, and vehicles like the Allante and Cimarron destroying their once sterling brand image, a gap in the luxury car market opened. Acura was created by Honda to enter this market to allow Honda owners to stay in the family, and give them a Honda to aspire to. Honda's Acura division was quite successful, and only reinforced Toyota's resolve to not only match, but exceed their Japanese rival.

Along with Nissan's Infiniti brand, Toyota spent several years developing a new luxury division of their own. The F1 concept would become the Lexus LS400, and would forever change American luxury cars, in the level of quality, performance, and expectations from the buyer. Toyota had tapped into the luxury car market unlike any company before.

Their new name for luxury was Lexus, and the rest is history.

The list of Toyota's accomplishments over the past 30 years is truly stunning. Toyota Corolla passed the VW Bug/Bettle to become the best-selling car of all-time. The Toyota Camry became the best selling car in America for 5 years running. The Toyota Tacoma, best selling compact/mid-sized truck. Lexus LS not only outsold it's rivals, but set records, for decades, as the best built car sold in America. Lexus became the best-selling luxury brand for 6 straight years running. The Lexus RX became best-selling luxury SUV for 7 years running.

With the release of the ultra-exotic Lexus LFA, to be release early in 2011, they have not only shown the world they can build exciting, powerful, precious vehicles that will easily compete with Ferrari and Lamborghini, but they even integrated an old craft from their early history. The car is heavily reliant upon carbon fiber, woven into the car's many panels, interior, even the hood's prop rod with meticulous detail. The LFA represents art, passion, engineering, technology, and Toyota's history with unparalleled results.

As we look into the future, gas prices have triple, and the 70's oil embargo has been revisited, in effect, as prices haven't been higher since then. Efficiency is once again the trend, and once again, Toyota has chosen to lead the way into the future.

The Toyota Prius was created in 1997 to show what a car of the 21st century could be, and to form a bridge between gasoline and electric propulsion, posting 40+ MPG ratings. The original sedan design gave way to a hatchback, and it's unique styling attracted those looking to stand out from the crowd. It consistently lost money for the first ten years in production, but Toyota worked tirelessly to reduce costs. By it's 3rd generation, it was not only the most aerodynamic sedan in America, it was also the most efficient, and sold almost 200k units in 2007 setting a new standard for Hybrids, alone outselling many car companies!

Hybrids have moved into SUVs, even sports cars, as Toyota has sold over 1,000,000 hybrids itself, and has shown skeptical domestic brands that there is a market, if you show leadership and if you can innovate. Initial hybrids were known to lose thousands of dollars per unit. Toyota knew it could only make Hybrids profitable if built on an economy of scale. They looked for partnership from the domestic automakers, but found no takers.

Toyota has since acquired over 70% of the Hybrid market, working independently and building "Sweat equity", leaving the competition at a huge disadvantage, as they fight amongst themselves for traction in the hottest market since the "crossover", a market also pioneered by Toyota and Honda.

Innovation and leadership have rewarded Toyota handsomely.

So Toyota, once a humble weaving company, now controls the United States' luxury car, hybrid car, and passenger car markets, and is looking to grow the Prius into a hybrid family of cars, crossovers, and even sporty coupes. And with the Toyota Corolla becoming the World's best-selling car of all-time, it's only fitting that they have become the World's largest car company.

Not bad for a basket weaving company.

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