NEW YORK — After five up and down years, Jim Lentz thinks Toyota is right where it’s supposed to be.
Five years ago, the company unseated General Motors as the world’s biggest automaker and its cars dominated much of the U.S. market with a reputation for bulletproof reliability.
Toyota even weathered the Great Recession with relative ease.
Then came a series of embarrassing safety recalls and a devastating 2011 earthquake and tsunami in Japan that shuttered the automaker’s parts suppliers and left it short of cars to sell.
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Today, sales have rebounded and Toyota is again making big profits.
Through it all, Lentz has been at the top of Toyota’s organizational chart in America. He was the public face of the company as it recalled millions of cars for sudden acceleration. Now he’s the North American CEO and a senior managing officer. He says U.S. sales are meeting expectations, and he likes Toyota’s position in the market.
That’s not to say there aren’t new challenges.
The company’s bread-and-butter vehicles, the midsize Camry sedan, the Corolla compact and the RAV4 small SUV, are under attack from new models introduced by revived Detroit automakers and newly energized brands from Korea. And there’s the question of whether younger generations want to buy cars.
In an interview, Lentz talked about the economy, Toyota’s position in the U.S. market, young people’s car-buying habits, gas prices, and how the company plans to handle tremendous competition. Below are excerpts, edited for length and clarity:
Q: In August 2008, your U.S. market share was 16.8 percent. Now you’re around 14.4 percent. To what do you attribute the decline and will you ever get back to where you were?
I think at the bottom, after the tsunami and everything else, our share dropped to 12.8, something like that. We were as high as 17 percent in 2009, in the midst of the financial crisis, when many of our competitors didn’t have access to capital. At the same time we had a spike in fuel prices. So we had a lot of tail winds. We’re on target to hit our sales plan this year.
Q: Do you attribute some of the drop to more competitive cars in your bread-and-butter markets?
A: Yes. There are much better cars on the market today than there were five years ago, and compared to 10 years ago, it’s a night-and-day difference. One reason the average age of a car today is 11 years is the quality’s gotten better. Look at the midsize segment. If you go back 15 years, there were really two major players, Accord and Camry. Today there are arguably five or six really good options.
Q: Why do you think the U.S. auto industry has come back as strong as it has? Did the comeback surprise you?
A: I don’t think it’s a surprise. The industry has historically been driven by low interest rates and (strong) consumer confidence. Today, interest rates are still at historical low levels. Consumer confidence, it’s wobbling its way back up.
Q: You’ve come through the tsunami, the recalls, manufacturing issues. What lessons have you learned, both as an executive and as a company?
A: I think if you look at the recalls, we learned to listen much better, we learned to act much faster, and we learned to be much more transparent.
Q: Is the recall situation fully behind you?
A: We’ve settled the MDL (multidistrict litigation) suits. We are making our way through the rest of the issues. I think from a customer standpoint, it’s behind us.
Q: Do you consider it high that gasoline has averaged $3.50 for three years, and does it matter anymore?
A: I think customers have been desensitized to high gas prices. What changes behavior is rate of change. So if gasoline goes from $3.50 to $4.50 over eight months, I don’t think consumers change their buying behavior. But if it goes from $3.50 to $4.50 in 60 days, that’s when we see change.
Q: What is the long view for Toyota on younger buyers who have a lot of student-loan debt and are coming into a lower salary base?
Despite the debt and despite either underemployment or lower salaries, those under 35 are coming back to the market at a faster rate than any other generation.
Q: What do you see happening in the midsize market? When it shakes out, is the Camry less dominant?
A: I think both we and Honda over the last 15 years have been less dominant. We will be competitive in the marketplace. This year I’m quite confident we’ll remain No. 1. There’s great competition. Accord is that much newer in the marketplace than we are.
In future generations of Camry, the styling will get more aggressive.
The new Corolla has it. I think styling-wise, drivability-wise, interior … it’s light years ahead of the car that it replaced.
Q: You mentioned you drive a Prius to work. What do you drive for fun?
A: I like to test drive a lot of our vehicles.
Obviously (the Lexus) LFA is a lot of fun to drive, ISF, (the Scion) FR-S I think is a lot of fun to drive.
Q: What’s your favorite car of all time?
A: Probably a ’73 911. And the coolest car my parents ever had was a ’63 Buick Riviera.