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As Toyota Motor President Akio Toyoda passed the banged-up Aston Martin Zagato in his Lexus LFA on the Nuerburgring race track last month, he figured that was it for the British race car.
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Toyoda and Aston Martin CEO Ulrich Bez, both recognized for their contribution to motorsports by the German auto industry this year, were meant to switch cars later and cross the finish line side by side -- Bez in the Lexus, the Toyota (7203.T: Quote, Profile, Research, Stock Buzz) chief in the Zagato.
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"I thought, 'that doesn't look good," Toyoda, an amateur racer, recalled after the four-hour endurance race at the track, in Germany's Eifel region. "I think everybody did."
The mishap seemed like a metaphor for the road his company has travelled since Toyoda took over more than two years ago.
His appointment in June 2009 came as the $115 billion company reported its first loss in decades, after the global financial crisis forced it to idle the many factories it had built over a decade of relentless expansion. That growth in pursuit of profits came at the expense of quality and innovation, critics said.
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Akio Toyoda, the first member of Toyoda family to take the helm since 1995, vowed at the start to take the automaker founded by his grandfather "back to the basics" of building cars that made people happy.
Barely six months later, the company plunged into its worst quality crisis in decades. Toyota took a firestorm of criticism over the slow response to recalling millions of cars to check for faulty accelerators in the United States. The safety crisis, which forced Toyoda to testify before Congress in February last year, threatened Toyota's reputation and continued success in its most profitable market.
Today, even as the world's biggest automaker is turning the corner on that crisis, with new evidence indicating human error and not faulty electronics was the cause behind most of the cases of unintended acceleration, things hardly look any better.
The yen, hovering around record highs, is hurting its price competitiveness. Japan's once-in-a-millennium earthquake and tsunami and Thailand's historic floods, have caused severe supply chain disruptions.
But perhaps the biggest challenge for a company Nissan chief executive Carlos Ghosn used to call "the Beast" is Toyota's brand image as a maker of durable and environmentally friendly cars -- but not much else.
Once the world's most envied car maker, Toyota is no longer the benchmark for rivals such as Volkswagen AG (VOWG_p.DE: Quote, Profile, Research, Stock Buzz) or Nissan Motor Co (7201.T: Quote, Profile, Research, Stock Buzz). That honor these days goes to a fast-rising Hyundai Motor Co (005380.KS: Quote, Profile, Research, Stock Buzz), whose stylish cars are making Toyota's look blander than ever.
"Toyota can't get by with its quality reputation alone anymore," said Kurt Sanger, a Tokyo-based auto analyst at Deutsche Securities.
"Fairly or unfairly, that's been tarnished by the recalls. But even before that, the other guys were getting better while introducing more interesting products. For Toyota to just continue to do what it was doing was not an option. It ignored that for awhile."
Toyoda, a self-proclaimed 'car guy', acknowledges in an interview with Reuters at the race track in Germany that his company may no longer be the beast, but it can still try to be the beauty.
