Toyota is globally well known for their affordable and reliable vehicles.
Now, Toyota is the world’s largest automobile brand and in terms of revenue, Toyota Motor Corporation is the ninth largest company in the world.
Sakichi Toyoda is the founder of Toyota Industries Co., Ltd.
The foundation of Toyota is very interesting.
Toyota Industries was founded after Sakichi Toyoda was inspired after reading a self-help book.
In his entrepreneurial journey, Sakichi Toyoda overcame countless challenges to become successful.
So, in order to completely understand the success story of Toyota, you should also know about Sakichi Toyoda.
So read on.
Sakichi Toyoda was born on February 14, 1867 in Kosai, Shizuoka, Japan.
He was born into a poor family and his father worked as a farmer and carpenter while his mother worked as a weaver to financially support the family.
The industrial revolution was rapidly taking place in the west and Japan took notice of this.
So, Japan had two choices either to jump on the bandwagon of the industrial revolution or to be left behind.
Fortunately, Japan chose the former and thus, the Japanese government called for inventors and Sakichi Toyoda was the first person to respond to the call.
During this time, he was in his early twenties.
Sakichi Toyoda was very inspired from a self-help book, in which he read about an inventor who invented motorised textile machines.
On one day, he returned home after working for his father’s carpentry business and then he observed that his mother was working very hard to weave the clothes.
Sakichi Toyoda realised that an automatic weaving machine would make her life comfortable.
And at that moment, he decided to make inventions to better the loom and thus improve the lives of his family.
But his father opposed his ideas but Sakichi Toyoda persisted and dedicated his complete time and attention to realise his dream of building a loom machine.
During 1891, at the age of 24, Sakichi Toyoda earned his first ever patent for the Toyoda power loom, a manually operated loom which was constructed of wood.
This was the first power loom in Japan and ran on one horse power oil motor and this machine was very reliable.
So, finally his infinite hours of hard work and dedication paid off.
Sakichi Toyoda caught the attention of the important business men and in May 1906 he founded the Toyoda loom company.
This company was started as a joint stock venture and started earning profits within a short period of time.
Sakichi Toyoda relentlessly worked on improving his manually operated loom and after a period of three years, he came up with a new invention of an automatic loom.
This was Japan’s first automatic loom.
Sakichi Toyoda was happy to taste his second success.
But the happy times didn’t last longer as during 1910, the economic recession struck Japan.
Sakichi Toyoda was severely impacted by the recession by which he lost all of his assets; his factory, the employees working for him and even the rights for his inventions.
All these developments made him resign from his very own company.
So after losing everything, Sakichi Toyoda decided to visit the United States for some inspiration.
Inspired by automobiles-
In 1910, Sakichi Toyoda travelled to Europe and the United States.
In the United States, Sakichi Toyoda was stunned by the rapid progress made with the help of the industrial revolution.
He was particularly attracted to automobiles.
This tour inspired Sakichi Toyoda to start his business afresh.
Later, he returned to Japan and in 1918, he started his new company, Toyoda Spinning and Weaving.
This was a fully-automated loom company and used to manufacture and sell the clothes.
The rights of this loom were sold in 1929 and in the process Sakichi Toyoda made one million yen.
He wanted to realise his dreams of producing automobiles as he got inspired by the automobiles on his United States visit.
So, Sakichi Toyoda gave this one million yen to his son, Kiichiro Toyoda on the condition that he should only use this money to research and develop Japan’s own automobile.
In the initial stages, Kiichiro Toyoda was not confident but he gained confidence after he toured the United States to observe the prominent automobile producers, much like his father.
After acquiring knowledge, he returned to Japan in 1930 and started working on producing automobiles.
Incentivized by the Japanese government-
During these times, the Japanese government offered incentives to entrepreneurs to manufacture cars.
Unfortunately, on October 30, 1930, Sakichi Toyoda passed away at the age of 63.
And Kiichiro Toyoda became even more determined to realise his father’s dream of making Japan’s first automobile.
In the late 1930s, Kiichiro Toyoda set up a research lab because he wanted to truly make Japan’s industry independent and end its reliance on the west for technology.
Also, he did not want to take someone’s hard work and employ it for manufacturing cars.
So, Kiichiro Toyoda set up a research lab by which new technologies can be built from scratch.
Spending billions of dollars-
Now, on an annual basis Toyota spends a whopping 9 billion U.S. dollars for research and development and sometimes, they even spend one million dollars every hour for the same purpose.
By 1933, an automobile department was founded in the Toyoda Automatic Loom Works factory.
And just after a year, they readied Japan’s first prototype engine for automobiles.
Finally in 1935, the dream of Sakichi Toyoda came true with the unveiling of the Model A1, Toyoda’s first prototype automobile.
The first car Model A1 or Toyota AA was a run-away hit.
Toyoda becomes Toyota-
In 1936, the name Toyoda was converted to Toyota.
The cars were initially named Toyoda after the name of the company’s founder and Toyoda means fertile rice paddies, which does not suit a car manufacturer.
The Toyota name was chosen because it required only eight brush strokes to write in Japanese and this number is believed to bring in luck and prosperity.
The luck and prosperity came, when on 28 August 1937, the Toyota Motor Corporation was established.
Toyota focused on producing more affordable cars than the cars imported by the Ford Motor Company or General Motors.
Consequently, a new plant was set up in Koromo, Japan.
This plant is now called Toyota city.
World War II-
Unfortunately, by the late 1940s, Toyota was on the brink of bankruptcy due to World War II.
These proceedings made Kiichiro Toyoda resign from his position and out of respect for him many workers in the Toyota factory resigned voluntarily.
Luckily, the Korean War saved Toyota because of the Korean War; the U.S. ordered more than 5000 vehicles from Toyota.
This order saved the Toyota Motor Corporation.
Luckily, Toyota became profitable within a few years as its Koromo factory was operating at its full potential.
During the 1950s, some Toyota managers realised that the American workers were nine times more productive than the Japanese workers.
They also got to know that the inefficient processes were to be blamed not the workers.
So, Toyota streamlined its process which boosted the efficiency and productivity.
At this time, when Toyota was on its road to success, unfortunately Kiichiro Toyoda passed away on 27 March 1952.
The void in leadership was filled when Eiji Toyoda, a cousin of Kiichiro Toyoda and Taiichi Ohno became in charge of manufacturing.
Both of them carefully examined each and every element of the Toyota plant and they improved production and productivity by a manifold by making some major changes like setting up the machines in the order they were utilised.
Thanks to all the improvements made by Eiji Toyoda and Taiichi Ohno, Toyota became Japan’s leading automobile manufacturer by the 1950s.
This success motivated Toyota to expand its success story beyond its home country, Japan.
Entering into the United States-
So, to identify opportunities in the foreign lands, Shotaro Kamiya visited the U.S. in 1955, the world’s biggest automobile market at that time.
In the United States, he noticed that even though the United States made large cars, they were importing small cars from Europe.
Here, Shotaro Kamiya saw an opportunity to introduce Toyota cars as the European cars were a way too expensive.
So, in 1958, Toyota shipped its affordable car, Toyopet Crown and also opened its first ever dealership in North America in Hollywood, California.
In the first year, Toyota was not able to make any significant progress in the United States market as it sold less than 300 cars.
But they were quick to realise their mistakes, as they understood that the Toyopet Crown which was originally built for the Japanese market was not at all suitable for the American market.
This model of cars had no issues on the moderate speeds on the Japanese roads but the American highways demanded even more from these cars as a result the cars got overheated and lost their power and would often consume too much fuel.
After this failure, Toyota decided to design cars specifically to the United States market.
This failure resulted in the development of the much acclaimed Total Quality Management (TQM) in 1964.
The TQM emphasised on the continuous improvement.
This process was supervised and later implemented by Kiichiro Toyoda’s elder son, Shoichiro Toyoda.
With the help of the TQM, Toyota was all set to become a world-class company.
And by the 1950s, Toyota was exporting its automobiles to different parts of the world like the United States, Brazil, Saudi Arabia, Taiwan, Thailand and Australia.
One of the main strengths of Toyota is performing extensive research on the external markets; this made Toyota to succeed all over the world.
Its principles like Genchi genbutsu, which means go to the source to find the facts to make the correct decisions, helped the company a lot.
And in 1964, Toyota released its first generation Corona in the American markets.
A year later, Toyota sold its first vehicle in Canada and during the same year the company was awarded with the Deming Prize for its Total Quality Management.
In 1966, Toyota released Corolla, which became its one of the bestselling and popular models of all time.
Surviving the oil crisis-
In 1973, the oil crisis erupted in America.
Suddenly, the demand for small and fuel-efficient cars skyrocketed.
This gave Toyota an edge over the American companies.
Due to the oil crisis the car industry needed more fuel efficient cars and Toyota was already producing fuel efficient cars.
During this period, many countries discouraged the import of cars from other countries; this forced Toyota to assemble its cars on the foreign lands.
This made Toyota a truly international company.
Now, Toyota is present in over 170 countries.
In 1984, Toyota opened its New United Motor Manufacturing in the United States.
This plant employed the TPS (Toyota Production System).
This system is based on the doctrine of mutual respect and trust between the employees and the management. TPS focuses on empowering the team members.
But this plant was later closed in 2010.
Toyota started opening its plants world-wide.
In the 1980s, they opened Kuozui Motors plant in Taiwan and Toyota Motor Manufacturing Kentucky and Toyota Motor Manufacturing Canada.
Now, Toyota has manufacturing plants in 28 countries.
Toyota also produces Lexus line-up of vehicles like Lexus RX.
Lexus is a sub brand of Toyota which produces luxury cars.
The first Lexus model, Lexus LS 400 was launched in 1989.
It took six years of research and development, 450 prototypes and four and half million kilometres of testing to make the Lexus LS 400 model.
First hybrid vehicle to be mass-produced-
In 1993, Toyota launched the G21 project, which is now known as Toyota Prius.
These are environmentally friendly vehicles.
Toyota Prius is the first hybrid vehicle to be mass-produced and till now, Toyota has sold over 10 million hybrids all over the world.
In 2012, Toyota Prius Plug-in Hybrid (Prius PHV) vehicle was launched.
This vehicle mates the hybrid technology with the positives of the electric vehicles.
This is the best selling hybrid of all time.
In 2009, the grandson of Kiichiro Toyoda, Akio Toyoda became the president of the Toyota Motor Corporation.
Akio Toyoda spurred new innovation into the company and as he was a motorsports fan himself, he instilled the spirit of Waku-Doki (meaning heart-pumping excitement) into Toyota.
Thanks to this spirit, the design and performance of all Toyota vehicles received a major upgrade.
In 2015, Toyota introduced the world’s first hydrogen fuel cell vehicle, Toyota Mirai.
Now, Toyota holds over 5000 patents in the area of fuel cells.
It took Toyota more than 20 years to develop these patents.
Toyota has made these patents available for royalty-free to other automobile manufacturers, energy providers and researchers.
This proves the dedication of Toyota to the development of clean and emission free vehicles.
Toyota holds thousands of patents in the automobile industry.
In 2015, Toyota introduced its TNGA (Toyota New Global Architecture).
Its main focus is to build better vehicles on the common platforms utilising the common parts.
The TNGA improved the efficiency of the manufacturing plants and made them reactive to the changes in the auto markets.
In 2016, Toyota inaugurated its Toyota Safety Sense (TSS) to enhance the safety of all its customers.
This technology was made available in the majority of Toyota vehicles irrespective of their price points.
Toyota Safety Sense technology brought many novel safety features in the vehicles.
Toyota’s innovations make our lives easier and more efficient.
Once, the Top Gear crew determined to destroy a Toyota Hilux.
But they failed even after making several destruction attempts, which included running the vehicle into a tree, drowning it into water, dropping a caravan on it, striking it with a wrecking ball, burning it and taking it to the top of a building which was going to be demolished.
The Toyota Hilux was recovered from the debris but to everyone’s surprise, its engine still started even after enduring so much torture.
This proves that the Toyota vehicles are well built.
This is the best testimonial of the quality of the Toyota vehicles.
According to statistics from the manufacturer, nearly eighty percent of the Toyota cars sold in the last twenty years are still running on the road.
Other interesting things-
- Now, there are more than hundred different models of Toyota cars available globally.
- By market capitalisation, Toyota Motor Corporation is the biggest company in Japan.
- Toyota also owns Lexus, Daihatsu, Hino, Kyohokai group, Red Entertainment and they also hold stakes in Subaru, Isuzu and Mitsubishi Aircraft Corporation. And until 2016, they also had stakes in Tesla.
- The Kyohokai group has more than 200 companies under it.
- Toyota is the world’s largest manufacturer of forklifts.
- They also make humanoid robots and this company also provides banking and leasing services.
- Toyota extensively uses robots in their manufacturing plants since 1970s and eventually they have developed robots to help humans.
- The Toyota robots can provide nursing support and can assist physically challenged persons.
- Toyota also participates in various philanthropic activities, environmental conservation, disaster relief, education, safety, etc.
- The net worth of Toyota is approximately $236 billion US and it employs around 340,000 people worldwide.
Its roots still exist-
Even today, Toyota still runs Toyota loom works under Toyota Industries Corporation.
The Toyota dream was passed on to many generations in the Toyoda family and now the dream is being worked upon by its 340,000 employees.
An interesting thing to be noted is that the values and work ethics which helped Toyota in its initial stages are still present.
The road to success is paved with the knowledge of the past.
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Frequently Asked Questions (FAQs)
How has Toyota been successful?
Toyota is one of the most successful companies.
The main reasons for its success are-
• Total Quality Management (TQM)- With TQM, Toyota made continuous improvements and eventually became a world-class company.
• Genchi genbutsu- The meaning of Genchi genbutsu is to go to the source to find the facts to make the correct decisions.
Because of this, Toyota has been making correct decisions based on facts rather than assumptions.
• Research and development- On an annual basis Toyota spends around 9 billion U.S. dollars for research and development.
It’s no wonder that due to this focus on R&D Toyota has developed many new technologies.
• Great build quality and reliability.
Why was Toyota created?
Toyota was created to research and develop Japan’s own automobile.
And Toyota Motor Corporation was established on 28 August 1937 in Japan.
What did Toyota originally manufacture?
The first product of Toyota was the Toyoda power loom.
Toyoda power loom was manufactured in 1891 and was a manually operated loom constructed of wood.
Also, this was the first power loom in Japan.
What was Toyota’s first car?
Toyota’s first car was Model A1 or Toyota AA.
It was unveiled in 1935 and released in 1936.
Toyota AA was a run-away hit.
Why did Toyoda change to Toyota?
Toyota was initially known as Toyoda, after the name of its founder Sakichi Toyoda.
But in 1936, Toyoda was renamed to Toyota because Toyota required only eight brush strokes to write in Japanese.
Also, in Japanese culture, the number eight is believed to bring in luck and prosperity.
Which brands does Toyota own?
Toyota owns three brands, namely-
• Hino Motors.
Toyota also owned Scion which is now a discontinued marque of Toyota.
Who are Toyota’s main competitors?
Toyota’s main competitors are-
• Ford Motor Company
• Hyundai Motor Company
• Honda Motor Company
• General Motors
• Tesla, Inc.
• Mazda Motor Corporation
• Bayerische Motoren Werke AG (BMW).
Why was Toyota’s first US car a failure?
Toyopet Crown was the first Toyota car to be shipped to North America.
Toyopet Crown didn’t sell more than 300 units, so it was a failure in the United States.
The main reasons for its failure are-
• Toyopet Crown was specifically built for the Japanese market but not for the American market.
• These cars overheated on the American highways and lost their power and often consumed too much fuel.