Cognitive Dissonance in Tokyo
But Wants Better Highways to Lift Demand Now
October 29, 2007; Page D2
Toyota Motor Corp. Chief Executive Officer Katsuaki Watanabe says his dream car is a vehicle "that can make the atmosphere clean…a vehicle that can never injure people, can never cause accidents and can go around the globe on a tank of gas."
But while we wait, Mr. Watanabe has something else on his agenda: Building more highways in Japan.
In Japan, he explains during a meeting with reporters on the sidelines of the Tokyo Motor Show, highways are so jammed that "people may realize cars are not needed in downtown areas." Sales of new cars in Japan have declined by 2 million vehicles, or about 25%, since 1990. Turned off by the hassle of driving in Japan's congested cities, many consumers are shifting to tiny microcars or simply going without a car. Japan is the auto industry's nightmare scenario come to life.
"We have to make these highways true highways, where people can speed up," Mr. Watanabe says. Beyond that, Mr. Watanabe says cities need to create more parking spaces. More roads and more parking spaces in Japan could "revive demand for larger cars. We haven't given up."
As for who should pay for this highway construction, Mr. Watanabe says, "we need the support of the government." In other words: taxpayers.
It may sound contradictory for Mr. Watanabe to call for pollution-free cars in one breath, and in the next plump for more highway subsidies to encourage sales of larger cars. But that's the way things are in the car business right now.
The Tokyo Motor Show, which opened to the public over the weekend, offered the customary displays of Japanese techno-goofiness, highlighted by Mr. Watanabe's entrance to Toyota's big press conference at the helm of a concept electric "personal mobility" vehicle called the "i-REAL," which looked for all the world like a wheelchair expropriated from the Star Trek museum.
The official theme of the Tokyo Show was "Catch the News, Touch the Future," with an emphasis on sustainable mobility. The underlying vibe was cognitive dissonance.
Nissan Motor Corp. exemplified the show's split personality. On one side of the stage at Nissan's show booth, there was the PIVO, a futuristic concept for an electric car with a cabin and wheels that could pivot so drivers never had to turn their heads to back up. On the other side of the stage was a car Nissan actually intends to sell, the Nissan GT-R, a nearly 500 horsepower gas-chugging machine with a tail-fin on the back.
"People love it," says Nissan Chief Executive Carlos Ghosn says of the GT-R. At the same time, Mr. Ghosn says Nissan and its French alliance partner, Renault SA, are pushing to develop commercially viable electric vehicles for sale by 2012. Mr. Ghosn, who also runs Renault, says he has concluded that big cities such as Paris and London will eventually forbid all but "zero emission" vehicles in their centers.
When people come under pressure in their lives, their responses can be contradictory and confused. What's so different about large auto companies, which after all are nothing but collections of individuals struggling to balance short-term and long-term interests?
Toyota's Mr. Watanabe has a particularly difficult challenge. On his watch as CEO, Toyota has achieved its goal of becoming nearly as large as General Motors Corp. in terms of vehicles sold world-wide, and is much larger than GM in terms of market capitalization.
But with greater power comes greater responsibility, and greater scrutiny. Toyota's decision to push its gas-electric hybrid Prius in the U.S. market – over the initial skepticism of some American executives – has proven to be a master stroke. Now, Toyota is getting flak from the U.S. Green community because it has joined the Detroit Three in opposing some of the more aggressive proposals for boosting U.S. fuel-economy standards.
Mr. Watanabe may dream of cars powered by fuel cells that require only cleanly-produced hydrogen for fuel, but Toyota's profits in the current year depend in part on convincing Americans to buy more V-8 powered Tundra pickups and Sequioa sport utility vehicles.
Toyota has an eight-story building in its headquarters complex in Toyota City, Japan devoted to research on advanced batteries and fuel cells. The company spends a massive 1 trillion yen a year ($8.75 billion) on research and development for new models and new technology. But the company's executives are still fundamentally conservative, particularly in the wake of a recent rash of quality problems.
Various upstart organizations and companies in the U.S. say they have developed systems for using lithium-ion batteries to extend the all-electric range of the Prius hybrid system. But senior executives in charge of Toyota's advanced vehicle efforts say they aren't going to rush to deploy their own lithium-ion battery systems for plug-in hybrids, and they say the costs of all-electric vehicles are still too high. Fuel cells? Probably not before 2015, and then in limited quantities, Toyota executives say.
Toyota's leaders get the same muddled signals from consumers around the world as their rivals. People say they love the Prius for its fuel efficiency, and then suggest to Toyota's marketers that it would be even better if it had a faster 0-60 time. People say they want fuel efficient cars, but cling to the notion that larger, more powerful cars should command a higher, more profitable price.
Mr. Watanabe and Toyota may have made some good calls during the last few years. But that's no assurance the future won't jump them tomorrow, just as it has in Japan.• Send comments about Eyes on the Road to firstname.lastname@example.org.