[got-rice]

http://www.detroitnews.com/article/20120430/AUTO0104/204300327/

After grappling for three years with one disaster after another, Toyota Motor Corp. is back on track: It's boosting sales and output, bolstering its vehicle-development operations and ratcheting up the pressure on rivals.

In the U.S., Toyota has regained its place among the top three players. It outpaced Ford Motor Co. and General Motors Co. in sales gains during the first quarter to capture a 14.5 percent share of the market — less than 2 percentage points behind GM.

Toyota's new Camry is once again the best-selling car in America. The company is expanding the Prius family of hybrid cars and revamping its flagging Lexus line as well.

"We're seeing more traffic, and we're seeing more folks buying cars," said dealer Bob Page of Page Toyota in Southfield.

But while Toyota's comeback is remarkable, given the magnitude of its recent troubles, analysts say the Japanese automaker will struggle to recover its peak profitability levels and may never regain the exalted status it enjoyed just a few years ago.

"They're not as formidable as they were," said Maryann Keller, head of Maryann Keller & Associates, a consulting firm in Stamford, Conn.

The industry is dominated by a handful of very strong players, including the revitalized U.S. automakers, Volkswagen AG and fast-growing Hyundai Motor Co. "There's nothing today that sets Toyota apart from its competitors," she said.

Toyota would have eventually lost its aura, and the multiple catastrophes merely sped up the process, Keller said.

Just about every car company was hammered by the 2008-09 downturn, which drove two of Detroit's automakers into bankruptcy. But Toyota was then engulfed by a massive recall crisis, followed by a record quake and tsunami last year that brought Japan's auto industry to a halt.

The Japanese also had to contend with a bizarre surge in the yen to near-record highs that gutted the profitability of their export operations. Floods in Thailand last summer caused fresh output disruptions.

Toyota's premium Lexus brand was hit especially hard. Unlike Toyota-brand cars that are built all over the world, all but one Lexus model, the RX sport utility, are produced in Japan.

"It just happened to be, unfortunately for us, a time when we were at the end of the life cycle for a whole bunch of our products," said Mark Templin, general manager of Lexus in the U.S.

In 2011, Toyota lost the No. 1 global sales ranking it wrested from GM just three years earlier.

"Last year was a tough year," said Jim Lentz, newly promoted chief executive of Toyota Motor Sales USA in Torrance, Calif.

'New product every 19 days'

In addition to the huge task of restoring its global supply lines and production, Toyota adopted measures to strengthen the company's recovery and improve its future performance.

Akio Toyoda, the founder's grandson, who had just become president in 2009 when the recall crisis erupted, has focused on streamlining the North American management. Last month, he expanded the responsibilities of top executives in North America and formed an integrated management group that can respond faster to market conditions — or to problems, such as the safety issues that led to recalls of millions of vehicles in 2009 and 2010.

"This is Akio's desire to continue to push more decision-making into North America. It allows us to work faster and make better decisions," Lentz said in an interview.

Toyota also is stepping up output and hiring in the U.S., partly to counter the yen's strength. It has opened a second shift at its Corolla car plant in Mississippi, and it's transferring Highlander SUV production from Japan to Indiana. It plans to beef up its North American technical center in Ann Arbor, hiring 250 engineers, technicians and scientists in the next five years.

Toyota is launching 19 new or updated models in the U.S. this year, including nine from Lexus, which fell behind the top German luxury brands in the U.S.

On a global basis, "We're introducing a new product every 19 days on average," said Bruce Brownlee, senior executive administrator for external affairs at the Toyota Technical Center.

Pricing power takes a hit

This year, helped by eco-car incentives in Japan and stronger-than-expected U.S. sales growth, Toyota is growing again. In the U.S., its sales climbed 15.4 percent last month for the strongest March total since 2008.

But while Toyota is gaining traction, its pricing power has been weakened by the setbacks and damage from the recalls.

Jesse Toprak, industry trends analyst at TrueCar.com, notes the average resale value for Lexus models has slipped a few percentage points since its 2004 peak.

Toyota's sales incentives, at $1,750 on average, are still below the industry average but roughly double what they were a few years ago, he said.

Analysts say it could take years for Toyota to recover the profitability levels of 2008, when its operating earnings totaled 2.27 trillion yen, or $28 billion at current rates.

They expect its operating profits for the fiscal year begun April 1 to be at least 50 percent below that level.

Moody's Japan K.K. in Tokyo says the strong yen is compounding Toyota's difficulties.

"Toyota … has not been able to raise prices in overseas markets or reduce costs enough to offset the stronger yen," it said in a recent report.

"Moody's expects Toyota's operating profit margin, excluding its finance business, to remain at about 2-5 percent during the next few years," compared with 8-9 percent before the 2008-09 recession, it said.

The momentum these days seems to be with other players — Hyundai and Germany's Volkswagen, Keller said. "It's just a tougher world."