A revamped version of the best-seller will be launched this year, with the car maker hoping for the usual high sales. But some have their doubts.
Toyota relies on tried and trusted Corolla
With Toyota Motor back on top as the world's largest car maker, the company's president, Akio Toyoda, isn't looking to a relative youngster such as the Prius hybrid to defend that lead. Instead, he's counting on a middle-aged veteran: the 47-year-old Corolla.
Later this year — the company has not said when or where — Toyota plans to introduce a revamped version of its global bestseller, which last underwent a redesign in 2008. No launch is more consequential for Toyota this year as the Prius is not due for a major change until next year and a new Camry sedan came out only about a year ago.
For Toyoda, the compact will be a chance to build on pledges to make cars that are more fun to drive and shed some of the company's reputation for blandness. More relevant for investors, the success of the top-selling car in history will help to determine Toyota's ability to return to the profitability it enjoyed before the global financial crisis and the recall of millions of vehicles.
The Corolla "might be viewed as boring by some, but for others it's bulletproof", said Kurt Sanger, a car analyst at Deutsche Bank in Tokyo, who has a buy rating on Toyota stock.
"The profit per unit might be lower than other models, but if you sell that many, you're going to make money."
Mr Sanger is optimistic over Toyota's moneymaking prospects.
He is among a dozen analysts tracked by Bloomberg who have raised earnings estimates for the car maker in the past month as the tumbling yen raises the value of Japanese exports.
Toyota's annual operating profit gains by ¥35 billion (Dh1.41bn) for every ¥1 drop in the value of the Japanese currency against the dollar, according to the car maker.
Toyota has sold almost 40 million Corollas over the years, said the Tokyo-based spokesman Jiecheng Fang. Although the car remained Toyota's top seller last year — estimated by the company at 1.21 million deliveries worldwide — Corolla sales have fallen from a peak of 1.42 million units in 2006 as Honda Motor's Civic and Hyundai Motor's Elantra won customers with fuel economy and lower prices.
The Civic overtook the Corolla as the best-selling compact sedan in the United States last year, according to researcher Autodata. This year, global sales of the Corolla will probably increase 7 per cent to 1.3 million units, according to Takeshi Miyao, an analyst with the researcher Carnorama Japan in Tokyo.
The declining popularity of the Corolla — described as "bland" by Consumer Reports magazine last year — has been mirrored in the company's earnings and share price, which have fallen since their peaks after the yen appreciated and recalls for defects associated with unintended acceleration dented Toyota's reputation for quality.
Toyota's profit forecast for the fiscal year ending March 31 is less than half the amount five years ago. While the company has returned to pre-crisis levels of quality, based on assessments at JD Power & Associates and Consumer Reports, the company is still facing safety recalls. Toyota said yesterday it is calling back almost 1.3 million vehicles, including 901,000 Corollas.
Toyota, which reports earnings next week, will probably triple its net income to ¥893bn this fiscal year and earn ¥1.2 trillion next year, according to the average of 24 estimates compiled by Bloomberg. The Corolla, meaning "crown of flowers" in Latin, is seen to be among the top sellers. "The Corolla remains incredibly important to Toyota," said Neil King, the global head of automotive research at Euromonitor International in London.
The car's history stretches back almost five decades, when Eiji Toyoda, the current president's great-uncle, first swept the United States with a car that helped the company ascend to the top of the automotive industry.
Since the first one rolled out in 1966, Toyota has used figures ranging from Homer Simpson to Brad Pitt to market the car to the masses. Among them was a young man who bought a used fourth-generation Corolla 1600GT as his first car. His name: Akio Toyoda.
"The car taught me the joy of driving," Mr Toyoda, whose grandfather founded the company in 1937, said last May at a Corolla event in the Japanese city of Ohira. "It was like a good friend."
Sandy Grossman, who has owned two Corollas and is in the market for a new car for his wife, has less fond memories.
"Toyota has become the dullest car company on the planet," said Mr Grossman of Coral Springs, Florida. "Since the late '90s, they have driven me away with boring vehicles that look and feel like an appliance."
Toyota, which typically redesigns its cars every five years, is stepping up efforts to revive interest. At the Detroit auto show this month, it showed off the Corolla Furia concept vehicle in a presentation punctuated by a snatch of Mariachi music and a comedic dance by the Toyota US vice president, Bill Fay. The sunburst-orange Furia, meaning "fury" in Spanish, was several centimetres longer, wider and lower-slung than Corollas in dealerships today.
Toyota will not be able to rely on its past success to make the next Corolla a hit as it faces intensifying competition from South Korea's Hyundai Motor and Kia Motors, General Motors, Ford Motor and Volkswagen, according to Maryann Keller, a principal at the consulting firm Maryann Keller & Associates in Stamford, Connecticut.
"The Corolla needs to become more interesting," Ms Keller said. "The same attributes that attracted shoppers 20 years ago don't work today."
* Bloomberg News