New U.S. boss seeks to learn from critics

Christine Tierney / The Detroit News

Toyota Motor Corp., which has climbed to second place in the U.S. auto market this year, expects to increase its share of sales in 2008 and is steeling itself to deal with the scrutiny and criticism that have grown along with its prominence.

"We have to develop a little bit thicker skin, and understand that that’s part of the game we play today," said Jim Lentz, newly appointed president of Toyota Motor Sales USA and the highest-ranking American executive at the Japanese automaker.

"We also have to recognize that some of the criticism is legitimate, and we have to make sure that legitimate criticism (is something) we look at and spend a lot of time analyzing and change direction, if necessary," he said in an interview Monday. "We can’t be arrogant and say everything we do is right."

Lately, many groups are finding fault with Toyota. At the Los Angeles auto show press preview last week, environmentalists singled out the automaker for criticism after it rolled out a redesigned large Sequoia SUV. Last month, the influential Consumer Reports magazine said it would stop automatically recommending new Toyota models after the automaker’s reliability ratings slipped.

Unusually for Toyota, its U.S. sales growth for 2007 is running behind its forecasts, and its new Tundra’s slow start in a slumping pickup market is viewed as further evidence of the automaker’s fallibility.

The backlash coincides with Toyota’s tremendous sales growth. It is closing in on General Motors Corp. in the global rankings. In the U.S. market, Toyota passed Ford Motor Co. after increasing sales 3.9 percent this year in a weakening market.

In 2008, Toyota expects to boost U.S. sales between 4 percent and 5 percent in a flat market.

"We will continue to outperform whatever the industry does," said Lentz, a 25-year Toyota veteran who was appointed president of the Japanese automaker’s U.S. sales arm earlier this month.

The position had been vacant since May 2006 when former Toyota Motor Sales President Jim Press was elevated to president of Toyota Motor North America, a less active post. Press left to take a big job at Chrysler LLC, one of three high-ranking Americans to recently resign from Toyota.

Lentz’s tenure dates to ‘82

Lentz, 52, joined Toyota in Portland, Ore., in 1982 and recalls an incident early on that convinced him he was with the right company. A Japanese couple came by the office one morning. "I let this guy in. It ended up that he was the president of Toyota Motor Sales — Mr. [Isao] Makino. Mr. Makino and his wife had just flown into Portland and all he wanted was a car and a map. He was going to spend a week out calling on dealers, just to understand what’s happening in the marketplace."

These days, Lentz travels to Japan twice a month to update his bosses. "We talk about whatever is going on at the time, whether it’s profits, or sales plan, or U.S. economy or the environmental situation, or what’s happening here at Toyota Motor Sales," he said.

"I think they, too, have developed a little bit tougher skin. They understood that, as we became more successful, we would become a larger target for criticism."

In Japan and in the United States, managers are trying to sift through the criticism and act on legitimate complaints, about quality problems, for instance.

"What has always made Toyota strong is this sense of kaizen," Lentz said, referring to a tenet of the Toyota Way that means continuous improvement. "We have to use whatever shortcomings or criticisms we have as a way to re-energize that kaizen within our culture, to make sure that we fix issues that we have before they become targets of our critics."

For a long time, "Toyota has had the advantage that they were considered the underdog," said analyst Jim Hossack at consulting firm AutoPacific Inc. "They’re considered a top dog now, and that has exposed them to more criticism."

He said the environmentalists’ denunciations appear spurious, while criticism of Toyota’s quality deterioration seems valid.

In 2005, soon after becoming CEO of Toyota, Katsuaki Watanabe ordered a quality initiative that has produced encouraging results internally, Lentz said. "Whether it’s plant quality, whether it’s warranty data, the numbers look very, very good."

The new Highlander crossover SUV launched in the summer, the first vehicle to go through the process, "appears to be the highest quality Toyota product we’ve ever launched," he said.

Green outcry a surprise

Toyota executives and dealers are more bewildered by the outcry from environmentalists. Toyota is the top seller of clean hybrids, but green activists are upset by the company’s decision to lobby along with Detroit’s automakers against the most stringent mileage rules now before Congress.

"Because we have this environmental image, people feel we should be doing more," said Mike Sullivan, a dealer whose stores include Toyota of Hollywood.

At the Los Angeles show last week, Toyota senior manager Bob Carter had a tense exchange with a protester that ended up as a clip on YouTube.

"If you look at what we are supporting today, it’s an increase in CAFE (mileage norms) of almost 40 percent, and that’s unprecedented, for the industry and Toyota to be asking or recommending a much higher CAFE," Lentz said. "We actually have a lot more in common than we have differences."