Just a Temporary Lull, Or Is Toyota in Trouble?

It doesn't draw the type of scrutiny General Motors Corp. faces when its market share falls below 30% for a month, but Toyota Motor Corp.'s core U.S. sales division is off to a surprisingly slow start in 1998.

At first blush it appears to be nothing more than a mild hangover from pulling Camry sales ahead to capture last year's best-selling car crown from Ford's Taurus. But through the first quarter Toyota Div. sales are off 16.2%. Granted, its upscale sister Lexus is on a roll (calendar year-to-date sales are up 33%).

Yes, Honda's Accord has proven itself a durable foe. And Land Cruiser doesn't seem to be much of threat to anyone in the bigger-is-better SUV segment. With the Big Three throwing bags full of rebate money at anything that doesn't look like a truck, a rebound likely won't come easy.

"They certainly have had the opportunity with the weak yen to stay competitive on incentives," says auto analyst David Healy of Burnham Investment Research. "It is a bit surprising to me that with a lineup of fairly new products they haven't done better."

Indeed, Camry sales are down 29% through the first quarter, but even the new Corolla, introduced last fall with a new design and lower price, is running about 9% below year-earlier levels.

On the light-truck side, Toyota is experiencing a sharp drop-off in sales of its T100 pickup, a decline largely explained by the upcoming introduction of its brand new and more powerful (V-8 vs. V-6) truck coming this fall from its Princeton, IN, plant. Yet even RAV4, its nimble car-based cute-ute, is off 10% through the first quarter.

Toyota has been pressuring dealers for about a year to improve their customer satisfaction numbers, but there's no major evidence of progress.

In early April Toyota Motor Sales U.S.A. Inc. announced a management shakeup that catapults Lexus Div. chief Jim Press into the leadership of a newly formed Automotive Operations Group. Both Toyota and Lexus divisions will report to him. Donald Esmond, formerly Toyota vice president of sales, is now group vice president and general manager of Toyota Div., succeeding J. Davis Illing-worth, who is now in charge of a new planning and development group.

Bryan Bergsteinsson, formerly vice president of human resources, is now group vice president and general manager of Lexus Div.

Meanwhile, Executive Vice President Yale Geiszl, the company's top American executive, has fewer people reporting to him and is spending more time on strategic issues.