Casanovas on foot baffle Toyota CEO as Japan sales shrink

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Akio Toyoda, president of Toyota Motor Corp., left, waves as he arrives for a lecture riding the company's Winglet personal transport assistance robot at Meiji University in Tokyo on Sept. 26, 2013.

While Toyota Motor Corp. (7203) President Akio Toyoda is on the cusp of a record year for profit, kids nowadays make him nervous. They're so clueless that boys without cars have the nerve to ask girls out.

"In the past, if you wanted to date someone, you couldn't ask her out if you didn't have a car," Toyoda, 57, told a packed auditorium of about 900 Meiji University students in Tokyo on Sept. 26. "It's all changed now. Money goes on monthly phone bills. Also, parking's expensive and it's easy to get around Tokyo on public transport."

Though he's kidding about the dating, the underlying theme is no joke. Among the biggest conundrums facing automakers: how to make cars cool again. Japan's aging population makes the mission more critical, with passenger-vehicle sales more than 20 percent down from their 1990 highs and the proportion of drivers in their 20s at half the level when Toyoda's generation reached an age when they could sit behind the wheel.

"Younger Japanese are quite different from the older Japanese and cars mean much less to many than 20 or 25 years ago," said Edwin Merner, president of Atlantis Investment Research Corp. in Tokyo, who's been in Japan since the 1970s. "They're more interested in tech gadgets, like the iPhone. Young people nowadays don't have the money to buy cars too."

As chairman of the Japan Automobile Manufacturers Association, Toyoda is leading a one-month campaign to preach the virtues of being a motorhead to students. The presidents of Honda Motor Co., Subaru-maker Fuji Heavy Industries Ltd. (7270) and Mitsubishi Motors Corp. (7211) plan to follow.

Image makeover

Since taking over as president and chief executive officer four years ago, the grandson of Toyota Motor's founder has been saying automakers need to jazz up their image. He's introduced the 86 sports car -- the Scion FR-S in the U.S. -- and pushed to give the Avalon, Lexus GS and Corolla sleeker designs.

He's also mindful of his own look -- typically a dark suit and rimless eyeglasses. At Meiji University, he rode in a Segway-like Toyota Winglet, donning khaki pants rolled up above the ankle, a square-ended crimson tie, black wayfarer glasses and a trendy hairdo.

During the 90-minute session, Toyoda fielded questions ranging from his favorite fast food -- he often has rice balls and sandwiches -- to how many holiday homes he owns -- he wouldn't say.

Mostly, he shared his passion for cars and how they should be loved like babies or pets, not commoditized like fridges.

Cars vs. phones

The point of the event was to encourage young people to better understand that cars are fun and Japan's auto industry has great potential, said Masami Doi, a Toyota spokesman. By that gauge, Toyota seems to have succeeded. About 90 percent of the audience raised their hands when he asked whether his talk raised their interest in autos.

Interested, they may be. Will that translate to sales?

Six out of 10 students interviewed by Bloomberg News after the talk said money held them back from buying a car. For many, it's a barrier likely to remain after graduation.

Average wages in Japan have fallen 15 percent in the past 15 years, government data show. That's driven by growing numbers of part-time workers, who make up 36 percent of the workforce from 20 percent in 1990, says the Organisation for Economic Cooperation and Development. In Japan, non-regular workers are usually young and the OECD estimates they're paid about 40 percent less than full-time staff.

Expensive parking

Parking doesn't help. It costs about $600 a month in the city center, second only to Hong Kongin Asia, according to Colliers International's latest global survey on rates.

Japanese in their 20s accounted for only 13 percent of all driving-license holders last year, compared with 26 percent three decades earlier, police data show. That's a steeper decline than the age group's share of the population.

After peaking at 5.1 million units in 1990, sales of passenger vehicles fell as low as 3.52 million in 2011 and may reach 3.98 million this year, according to the automobile association. By percentage, Japan's long-term declines are similar to those in Europe, where sales are at their lowest levels since records began in 1990.

Though dwindling interest in cars is a worldwide trend, falling wages and the aging population mean it's been steeper in Japan, said Yoshiaki Kawano, a Tokyo-based analyst with IHS Automotive.

One way Toyoda plans to lure a new generation of buyers for the Toyota City-based automaker is to target parents. The idea being that if dads talk about autos enough at the dinner table, their children will catch the car bug too.

Golden age

An example is the 86, which Toyota rolled out last year. The model draws its name from the AE86 Corolla Levin FR introduced in 1983, in the golden era of Japanese sports cars -- think Toyota's Supra, Nissan's Skyline GT-R and Mazda's RX-7. Toyota has said it expects 65 percent of 86 buyers in Japan to be in their 40s and 50s.

"There are people who've experienced the times when cars really made life enjoyable, myself among them," Toyoda told the students. "If that generation can show how much they love cars, young people may start to wonder why adults are so happy and get interested in them too."

If more Japanese youths are like Keiko Kato, Toyoda may find kids will be kids and won't always share the values of the older generation. Kato was one of three students who said after the talk that they still couldn't see the need to own a car.

"If someone gave me 100,000 yen ($1,000) a month to spend on whatever I wanted, I don't think I'd save for a car," said Kato, 19. "I'd rather spend it on something practical like a fridge, microwave, or pretty furniture."

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