Battered by Crises, Toyota Declares a Rebirth

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The Crown, the preferred ride of staid Japanese executives, had received an edgy makeover. With a new oversize grille, vamped-up hybrid engine and an unveiling at a fashion mall, there was nothing stodgy about this car.

“Reborn,” read a logo beamed onto a large screen.

“My initial reaction was: ‘You’re kidding! Please, not pink,’ ” Akio Toyoda, the Toyota chief executive and a scion of the Japanese automaker’s founding family, told reporters at the event. “But being reborn does mean taking on new challenges.”

Toyota has spent much of the last year trying to leave behind what has been a tumultuous four years in which the automaker booked its largest loss ever, became embroiled in a recall scandal, struggled with a decimated supply chain after the 2011 tsunami and weathered the punishing effects of a strong yen.

One by one, the pieces have been falling into place.

In 2012, Toyota leapfrogged General Motors and Volkswagen to regain its title as the world’s largest automaker, selling 9.7 million vehicles, a record for the company. Now the company is on the cusp of a recovery, analysts say, that could put it on track to post the kind of growth promised before the crises.

“Toyota is now in the position — for the first time in years — where it is beating market expectations while its peers are disappointing,” Clive Wiggins, a Tokyo-based autos analyst for Macquarie, said in a recent note to clients. “We expect earnings to continue beating expectations over the next three years.”

Last week, Toyota agreed to pay more than $1 billion to settle a class-action suit over claims that its electronic malfunctions caused its cars to accelerate without warning, one of the largest payouts ever for an automotive lawsuit. Toyota still faces personal injury and wrongful death lawsuits, as well as an unfair business practices case brought by 28 attorneys general in the United States. But the company’s $1.1 billion charge against earnings for the class action was seen as a significant step toward closing the chapter on its recall problems.

There have been other signs of change. The company supply chain bounced back more quickly than predicted, profits are on the rise and the yen has started to weaken after the newly installed prime minister, Shinzo Abe, promised to drive down that currency.

And there is a loud message of change being sounded through the stepped-up emphasis on design — with both Toyota and Lexus models getting new looks, including the pink Crown. “It’s actually a beautiful color,” Mr. Toyoda said.

Toyota’s rebound has been centered in the United States, where its sales increased 28.8 percent last year to 1.88 million vehicles through November. That’s more than double the industrywide increase of 13.9 percent over the same period.

The biggest contributors have been stalwart products such as the Camry, and the expanded line of Prius hybrid models. Through November, combined sales of Prius cars had risen 81.3 percent in 2012, as the company continued to dominate the hybrid segment.

The company is also betting on a revamped version of a perennial also-ran, the Avalon sedan. Sales of the current version of the car were down 5 percent last year. The new model, with its wide-mouth grille and sculptured headlamps, reflects the company’s efforts to appeal to younger buyers. Toyota is trying to shave 10 years off the average age of buyers, now in the mid-60s.

The Avalon, which was designed and engineered in Michigan and is being built at Toyota’s assembly plant in Kentucky, is also a test of how much Japanese officials can delegate decision-making to the company’s subsidiaries. Promoted as Toyota’s most American vehicle ever, the Avalon is the first Toyota prototype not developed in Japan but at the sprawling Toyota Technical Center near Ann Arbor, Mich., where 1,100 employees work.

Hiroko Tabuchi reported from Tokyo and Bill Vlasic from Detroit.

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