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  • Writer's pictureTim Jackson

From an industrial mill to the #1 carmaker – Toyota story

Updated: Nov 3, 2023

Toyota Motor Company is a Japanese multinational automaker that is headquartered in Toyota City, Aichi, Japan. Toyota Motor Company was founded by Kiichiro Toyoda in 1937 as a spin-off from his father's company, Toyota Industries. The origins of the company can be traced back to 1924, when Sakichi Toyoda invented the Toyoda Model G Automatic Loom. Toyoda’s invention of the Automatic Loom revolutionized the textile industry and made the Toyoda family one of the wealthiest in all of Japan.

Kiichiro Toyoda was interested in the automobile industry and traveled to Europe and the United States to study car production techniques. Toyoda returned to Japan with the goal of creating a Japanese car company that could rival the established American and European manufacturers. In 1933, Toyoda established an automotive department within Toyota Industries and began designing and producing motor vehicles.

The first Toyota car, the Model AA, was introduced in 1936. It was based on the Chrysler Airflow and was powered by a 3.4-liter inline-six engine. The Model AA was well-received in Japan and helped establish Toyota as a serious player in the automotive industry.

The company's growth was interrupted by World War II, during which Toyota produced trucks and military vehicles for the Japanese army. After the war, the company resumed production of cars and began exporting them to other countries.

Edward Deming played a significant role in the adoption and popularization of the principles of quality management and continuous improvement, including Kaizen, within Toyota and the broader Japanese manufacturing industry.

Edward Deming was an American statistician, engineer, and management consultant who became renowned for his expertise in quality control and statistical process control. In the 1950s, Japan was seeking ways to rebuild its economy and improve the quality of its products. Deming's ideas and teachings were instrumental in shaping the quality management practices that Toyota and other Japanese companies adopted.

In 1950, the Union of Japanese Scientists and Engineers (JUSE) invited Deming to Japan to deliver a series of lectures on statistical process control and quality management. His teachings emphasized the importance of reducing variation, improving processes, and creating a culture of continuous improvement. Deming emphasized that quality was not just the responsibility of the inspection department but should be built into every aspect of the production process.

Deming's ideas resonated with Japanese manufacturers, including Toyota. Taiichi Ohno, one of the key architects of Toyota's production system, was heavily influenced by Deming's teachings. Ohno recognized the value of statistical control and the need for continuous improvement to achieve superior quality and efficiency.

Toyota embraced Deming's philosophy and integrated it into the Toyota Production System. Deming's emphasis on empowering employees, eliminating waste, and continually improving processes aligned with Toyota's goal of achieving excellence in manufacturing.

Deming's teachings also had a broader impact on the Japanese manufacturing industry as a whole. The principles of quality management and continuous improvement propagated by Deming were embraced by numerous companies in Japan, leading to a significant shift in the country's manufacturing practices and reputation for producing high-quality products.

One of the key people involved in the growth of Toyota was Eiji Toyoda, Kiichiro Toyoda's cousin. Eiji Toyoda joined the company in 1936 and became president in 1967. He was instrumental in establishing Toyota's famous Toyota Production System, which focused on reducing waste and increasing efficiency in manufacturing. This system became a model for other companies and is still used by Toyota today.

In the 1960s, Toyota began exporting cars to the United States. The company's first American dealership was established in 1957, but it wasn't until the 1960s that Toyota began to gain a foothold in the American market. The company's small, fuel-efficient cars were well-suited to the American market during the oil crisis of the 1970s, and Toyota's reputation for quality and reliability helped it gain a loyal following.

A Toyota story that is etched in my memory and will be forever, has to do with when Toyota was first entering US market with their cars, in the early 1960s. Toyota had dealer development people go from city to city and town to town to scout the best prospects for dealers to represent the company in local markets. One stop in a small town in western Colorado had the Toyota dealer development official stop by a Chrysler dealership. The Toyota rep called on the dealership owner and said “You come highly recommended to us to represent Toyota in the market.” The third-generation dealer didn’t know Toyota cars very well at all. He had never even driven one yet. The dealer asked what it would take to become a dealer. The response was “You would need to sign our sales and service agreement and agree to buy a Toyota sign for your dealership.” The dealer asked how much the sign would cost. The answer, “$5,000.” The dealer, thinking that was an outrageous price for a sign, rejected the offer to become a Toyota dealer. A competing dealership down the street, a second-generation General Motors dealership owner, agreed to buy the sign and executive the Toyota dealership sales and service and service agreement.

A few weeks later, a representative from Subaru was in the same town, scouting dealer owners to sign on to become a Subaru dealer in that town. Subaru approached the same Chrysler dealer owner that Toyota recently had approached. Subaru had a similar offer, though the price for the sign was only $2500 versus the much higher $5,000 for Toyota sign. That dealership is still a Subaru dealer today nearly 70 years and another owner generation later. The other dealer is still a Toyota dealer today, nearly 70 years later. Dealership development for Toyota played out similar to that all over the United States in the early 1960s and beyond. Toyota was able to build one of the strongest dealer networks in the country.

In the 1980s and 1990s, Toyota continued to expand its operations around the world. The company established manufacturing plants in the United States, Canada and Europe, and began producing cars specifically designed for these markets. In 1997, Toyota became the first Japanese car company to sell more than 1 million cars in the United States in a single year.

Today, Toyota is one of the largest car companies in the world, with operations in more than 150 countries. The company is known for its innovative designs, focus on quality and reliability, and commitment to sustainability. Toyota has also been a leader in the development of hybrid and electric cars and has set a goal to eliminate carbon emissions from its vehicles by 2050.

The models Toyota builds and sells that have proved most popular in their new vehicle categories are: Camry, 4Runner, Highlander, Rav4, Sienna, Sequoia, Tundra, Tacoma, Prius and the all new Crown. For decades, the Toyota Camry was the fastest selling car in the US and the world. Early in 2023, the Tesla Model 3 just ended that long term, four-decade trend.

Toyota is the hands-down leader in hybrid powertrain technology, in some years selling more hybrid vehicles than all other automakers combined. Now Toyota is moving to bring hybrid and plug-in hybrid (PHEV) technology to all vehicle models. Though leaders in hybrid and PHEV tech, Toyota has been widely criticized for lack of production in pure battery electric vehicle (BEV) technology. Recently it was announceds that Toyota will re-structure its BEV production methods and plans to better compete in those markets.

Toyota Motor Company is a success story that began with the vision of Kiichiro Toyoda and the ingenuity of Sakichi Toyoda. The company's commitment to quality, efficiency and innovation has helped it become one of the largest car companies in the world. Eiji Toyoda's contributions to the development of the Toyota Production System were instrumental in the company's growth and success. Toyota's expansion into the United States and other markets around the world helped it become a global automotive behemoth that has been recognized for its quality, durability and reliability. Today, Toyota continues to innovate and lead the way in the automotive industry, while also striving to be a responsible corporate citizen.


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