One of the ways Toyota Motor has climbed to the top of the global auto industry is by keeping it simple: Models like the Corolla, Camry and Yaris sell in Asia, Europe and North America, with minor modifications to meet local regulations.
A potential side effect, of course, is that when a quality issue arises, it can quickly snowball into a worldwide crisis, as Toyota knows all too well at the moment. But the benefits of producing global cars in huge volumes--lower costs for development, tooling and production, plus stronger brands--outweigh those risks when done well.
That formula explains why Toyota's compact Corolla is the world's most popular car, with 908,661 units sold last year, about one-third of them in the U.S. The Corolla is among the vehicles Toyota recalled for potential pedal entrapment and a sticky accelerator, but sales aren't expected to suffer enough to knock it out of first place. Two other Toyotas, the Camry and the Yaris, also make the top 10.
The lead may not last forever, though. Ford is copying Toyota's strategy, and with great success. Instead of selling different vehicles in different regions and calling them all the Focus, Ford is rolling out a new-generation Focus that was developed from scratch to sell in every market in the world. Last year the company sold 781,139 Focus cars, landing it in second place on the list. Its tiny Fiesta, popular outside the U.S. where little cars rule, is third with 724,502 sold. This year Fiesta is making a comeback in the U.S. as a global car.
Others on the list, compiled by IHS Global Insight: Volkswagen's Golf and Polo hatchbacks, Honda's Civic and Accord and the Peugeot 207, which isn't sold in America.
But the automotive landscape is changing rapidly. Forecasters at J.D. Power & Associates say that as China and other emerging markets become the industry's dominant battleground, that one-size-fits-all strategy will be harder to pull off.
"Ten years down the road the auto industry will be extremely different from the way we know it now," said John Humphrey, senior vice president of global automotive operations for J.D. Power. Worldwide sales volumes will rebound after the recession and grow to about 72 million vehicles by 2011, he said--up from about 64 million in 2009--but that growth will be coming from new regions with different consumer needs.
It used to be that the only markets that mattered to the auto industry were the U.S., Japan and Western Europe. They're still important, but they're not growing, so they'll chip in less of carmakers' future profits, said Humphrey. "The center of the automotive universe is going to change."
One of the bestselling cars in the world, for instance, isn't a car at all: It's a little van called the Wuling Sunshine, and is sold almost exclusively in China. Driven for both business and personal use, the Sunshine outsold both the Honda Accord and the Toyota Yaris on a global basis last year. (It doesn't appear on the list of the world's most popular cars because it's classified as a "mini-commercial" vehicle. If it did, it would rank seventh.)
Now GM and China's SAIC Motor, which build the Sunshine in a joint venture with Wuling Motors, plan to expand the Wuling lineup of cheap mini-vehicles and sell them in large volumes throughout emerging markets. Engineers in China--not Detroit--are taking the lead on developing those low-cost cars.
Likewise, Toyota is beginning to give its local operations more flexibility when it comes to product decisions. The shift under Chief Executive AkioToyodaAkio Toyoda was triggered in part by the quality issues that have hounded the company as the carmaker has grown far beyond its Japanese roots.
Each of these smaller markets is unique, however, with different consumer needs, tastes and regulatory requirements. One of the toughest challenges automakers face will be to create products on a market-by-market basis that are well-differentiated in the eyes of the consumer, while also keeping keep costs down and reducing complexity.
Unfortunately those challenges often contradict one another. Faced with a choice, most carmakers opt to cut costs rather than tailor products to meet local customers' needs, said Humphrey. "You wind up missing the market."
Ford aims to meet both challenges by building up to 10 different models--about 2 million vehicles in all--off the same global platform that underpins the new Focus.
Toyota might want to check its rearview mirror.
By Muller Joann