Toyota's Toyoda Apologizes to China For Recalls


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BEIJING March 1, 2010; Michael Wei and Ben Blanchard writinfg for Reuters reported that Toyota Motor Corp President Akio Toyoda apologized to Chinese consumers on Monday over the company's massive global recall, seeking to ease quality concerns in the world's biggest auto market.

Toyota's woes in China have so far been limited to a recall of 75,552 RAV4 vehicles due to faulty accelerators, but Toyoda's visit after a grueling hearing in the U.S. Congress underscores the importance of a market that surpassed the United States last year to become the world's largest.

"We will continue to work hard. I'm here to offer my deepest apologies," Toyoda told a packed room of over 300 reporters in Beijing, speaking calmly with no visible sign of emotion.

Toyota is sticking to its target of selling 800,000 units in China this year, he said, adding he hoped the company's swift handling of the RAV4 recall would restore consumer confidence.

The RAV4 was the only model sold in China that had experienced an accelerator problem, Toyoda said, specifying that Chinese consumers need not worry about the Prius or Lexus because parts behind recalls of those models were not used in China.

The company founded by his grandfather has recalled more than 8.5 million cars globally for unintended acceleration and braking problems in a widening safety crisis that broke in January.

The bulk of the recalls are in the United States, where Toyota's February sales are expected to take a major hit.

Toyoda's China visit comes at a time when the company is already struggling to keep up with rivals including General Motors, Volkswagen AG and Ford Motor Co in taking advantage of a boom in China's auto market.

GLOBAL POSITION

"He's making this trip because China has become the biggest auto market, in which Toyota underperformed last year," said IHS Global Insight analyst John Zeng. "If Toyota loses China, its global position would be challenged."

Vehicle sales in China jumped 53 percent last year to 13.6 million units. Toyota, which produces cars in China in tie-ups with FAW Group and Guangzhou Automobile, saw its sales rise only 21 percent to 709,000 units, about 5 percent of the market.

Analysts say the trend was largely because Toyota and other Japanese automakers such as Honda Motor Co have relatively few small, affordable models that are both eligible for the tax breaks that have driven sales and are within the reach of most Chinese families.

Its sales in Japan have not been seriously affected by the recall of its latest model Prius and other hybrid models, with data on Monday showing February sales rose nearly 50 percent from depressed year-ago figures.

The response from the Chinese public has been generally muted. Still, ahead of the news conference, security guards dragged away at least three Chinese protesters who said they were demanding a public apology from Toyota for brake problems on cars they owned.

"You apologized in the U.S., but in China you just don't care," shouted one protester, who gave his family name as Zhang. "You can't only think about making money, you have to solve the quality issue."

The low-key visit to China, with little advance notice and limited public appearances, contrasted with Toyoda's high-profile showing last week before the U.S. Congress.

Toyota's aim of selling 800,000 cars in China this year would represent growth of about 13 percent from 2009, compared with a gain of about 10 percent that most analysts are expecting for China this year. The company's January car sales in China surged 53 percent to 72,000 units.

While the recall could impact Toyota sales in China in the near term, it did not necessarily constitute a major problem for the company, said Zhang Xin, an analyst with Guotai Junan Securities in Beijing.

"I know that some people have doubts about Toyota cars in China now, but I don't think that will last very long," said Zhang. "If Toyota can prove itself and continue to come up with good cars with a reasonable price tag, people will continue to by Toyota cars."

Writing for Reuters by Jason Subler and Doug Young; Additional reporting by Kiyoshi Takenaka in Tokyo, Fang Yan and Farah Master in Shanghai, and Reuters Television; Editing by Lincoln Feast and David Holmes

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