The March 11 earthquake that shook Japan to its core had many collateral damages, one of which was vehicle manufacturing. For example, more than 650 of Toyota’s suppliers suffered great damages and halted production, forcing the Japanese automaker to reconsider its strategy.

Two weeks later, its management had reached the conclusion that it should focus its worldwide resources mainly on one model line. “We were rapidly burning through cash, so in order to survive this we prioritized the cars our customers wanted most” explained head of production Atsushi Niimi.

So which vehicles were the chosen ones? Could it be the cars that helped it the most to become the world’s number one car manufacturer since 2008? Nope: Corolla and Camry would have to take a back seat to hybrids, and especially the Prius. Therefore, Toyota started off by ensuring that it could find parts for the Prius and the Lexus hybrids.

“The last several years have been a triple shock for Toyota” said Masatoshi Nishimoto of Tokyo-based consulting company HIS Inc. “It’s now at a major turning point.”

The first came in 1990. Up until that point, six of the world’s 10 biggest companies were Japanese, with Toyota in ninth place. When the real estate bubble burst, things changed dramatically: Toyota is the sole Japanese company in BusinessWeek’s top 50 ranking, down to 35th place.

Then there was the 2009-2010 floor-mat and sticky pedal recall saga. The way it was handled resulted in a $16.4 million dollar fine by the NHTSA and millions of recalls – which meant more millions lost, and perhaps more importantly, the loss of Toyota’s reputation as the manufacturer of the world’s most reliable cars.

This year’s earthquake, along with the strengthening of the yen against the US dollar, made things even more difficult as of all Japanese car manufacturers, Toyota is the one that builds the most cars domestically.

Toyota will certainly lose the number one spot on world sales to General Motors this year and Lexus, after a decade, falls behind rivals BMW and Mercedes-Benz. Now, Akio Toyoda is betting his company’s future on hybrid technology and especially the Prius. The three new models of the world’s best-selling hybrid take center spot have to succeed if the company is to make a quick recovery.

Story source: Bloomberg

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