Toyota Chief to Visit China

BEIJING—Akio Toyoda's planned visit to Beijing reflects the importance for Toyota Motor Corp. of containing damage to its reputation in China's huge market, where the Japanese company was struggling even before its recent recall problems.
The 53-year-old Toyota president and grandson of the company's founder is expected to hold a press conference in the Chinese capital Monday to address quality concerns, the company said. He also is expected to meet with high-level government officials to remind them of the company's commitment to safety and quality, according to Toyota executives who briefed reporters Sunday night.
"Given China's strong sense of rivalry with the U.S., after we explained our situation to American lawmakers and apologized to U.S. customers last week, there isn't an option for Mr. Toyoda and the company to skip China," one U.S.-based senior Toyota executive, who is close to the Toyota president, said in a telephone interview Sunday.
Toyota's quality issues haven't been as severe in China as in the U.S., where it has recalled millions of cars over problems with accelerator pedals and other issues. In China, Toyota has recalled 75,552 RAV4 vehicles, a tiny fraction of the 8.5 million vehicles it has recalled world-wide.
But Toyota's overall recalls in China rose sharply last year—it recalled a total of 989,000 vehicles in China in 2009, up from the 209,000 in 2008. And China's quality watchdog warned in a notice late last week that there could be more Toyota cars in China affected by the current recalls, pointing to the existence of Toyota cars brought into China outside its formal distribution channels. A Toyota spokesman said the number of such cars in China should be "very small."
Toyota was late to expand in China, and it has lagged behind global rivals like Volkswagen AG and General Motors Co. That has hurt the company, as China overtook the U.S. last year as the world's biggest car market, with sales surging about 50% to 13 million vehicles, compared with just over 10 million in the U.S.
Toyota fell severely behind the market last year—its sales grew just 21% in 2009 to 700,900 vehicles—because it failed to provide cars that matched consumers' growing appetite for smaller, more fuel-efficient cars. China's government has encouraged the purchase of such cars through incentives and other stimulus measures, a policy the car maker didn't anticipate.
The planned China visit follows a multistop fence-mending tour in the U.S. last week during which Mr. Toyoda appeared before a Congressional committee to answer often-angry questions about Toyota's quality problems. He also apologized to victims of sudden acceleration accidents and to customers concerned about the spate of quality problems, and sought to reassure Toyota's dealers and workers that the company will regain its footing. The trip was highly emotional, with Mr. Toyoda occasionally choking up.
Sales of Toyota vehicles began picking up toward the end of last year, but the Toyota executive said it was deemed desirable for Mr. Toyoda to personally reach out to consumers here to contain any damage from the quality debacle.
Hitoshi Yokoyama, a Toyota spokesman, said it was tough to gauge the effect of the current problems on sales in China in part because the country's Lunar New Year holiday, during which retail sales tend to slow, fell in February this year but in January last year, making comparisons difficult.

A senior Beijing-based Toyota sales executive said sales have slowed "noticeably" in Beijing and Shanghai, where he said local media outlets reported more aggressively about Toyota's latest quality lapses. Southern China, a major market for Toyota in China, was more immune to the bad news, but Toyota is considering sales incentives or other measures to maintain customer traffic into showrooms, the executive said.
Liu Jiaxiang, a Toyota dealer in Shenzhen, said sales at his stores in southern China have been "steady" since late January. "What keeps me awake at night is a possible long-term erosion of customer confidence in the Toyota brand" because of the recall problem, he said.
Toyota has suffered criticism over a recall before in China. Last April it recalled 259,119 Camry sedans because of brake problems—the company's biggest single recall announcement in China. China Central Television, the state-run broadcaster, in a report on the brake problems featured an interview with a legal adviser from the China Consumers Association who accused Toyota of hiding the problem. Toyota issue the recall three days after that program aired.
Mr. Yokoyama, the Toyota spokesman, said the accusation it hid the problem was "completely groundless" and that the recall wasn't related to the CCTV report.