Shoichiro Toyoda, pilot behind Toyota's N.A. expansion and Lexus launch, dies at 97

TOKYO — Shoichiro Toyoda, the former Toyota Motor Corp. president who led the company his father founded into U.S. auto manufacturing and unprecedented overseas expansion, died Tuesday at age 97.

The cause was heart failure, according to Toyota, which announced his passing in a news release shortly thereafter. Funeral services will be held for close family members only, with a more public farewell ceremony planned for a later date.

Toyoda piloted his family's namesake company through the trade tensions of the 1980s. He also represented the Toyoda clan on the board for 57 years, making him the automaker's longest serving director. He is also the father of current Toyoda CEO Akio Toyoda.

His tenure as president of the automaker, from 1981 to 1992, was notable for Toyota's plunge into North American manufacturing and the rollout of the Lexus luxury brand.

The Japanese carmaker's move to start building vehicles in the U.S. was partly aimed at defusing trade friction. But it laid the groundwork for a more balanced cost structure, improved efficiencies and vehicles that were better tailored to local demand.

Educated in engineering at Nagoya University, Toyoda was customarily referred to as Dr. Toyoda inside the company as a nod to his doctoral thesis on fuel injection. The title also helped to distinguish him from Eiji Toyoda, a cousin of Shoichiro's father who preceded Shoichiro as company president.

In a company renowned for its manufacturing prowess, Toyoda was respected for his keen eye for product. He also recognized that American input was necessary to make his cars more appealing to Americans and as a critical step toward global expansion.

When Toyoda took the helm in July 1981, all Toyotas sold in North America were imported. By the time he left that office in 1992, 40 per cent of them were made locally.

Toyoda was inducted into the Automotive Hall of Fame in Dearborn, Mich., in 2007. Eiji Toyoda had been inducted in 1994.

The automaker's U.S. sales surged 49 per cent from 711,993 when he became president in 1981 to 1.1 million vehicles in 1990, before dipping back to 1 million when he stepped aside in the downturn year of 1992. The booming U.S. business underpinned Toyota's explosive global expansion during the 1980s. Worldwide sales climbed 39 per cent to 4.64 million vehicles in 1992 from 3.34 million in 1981.

Fueling the U.S. surge were Toyota's first assembly plants in North America. The first, New United Motor Manufacturing Inc., was a joint venture with General Motors set up in 1984 in Fremont, Calif., to test the waters.

The next opened four years later in Georgetown, Ky., and remains Toyota's biggest in North America, churning out 504,213 vehicles in 2013.

Toyoda also greenlighted Toyota's first assembly plant in Europe, in Burnaston, England, and its first in Canada, in Cambridge, Ontario.

NUMMI proved to Toyoda, and to the automaker, that investing in American workers would work. "A trust was established between the American workers and Japanese management," Toyoda recounted in the book Toyota by Edwin M. Reingold, published in 1999.

Changing times forced Toyota to ramp up North American production. Voluntary export restraints agreed to by the Japanese government in the year Toyoda became president capped made-in-Japan shipments to the U.S.

Then the 1985 Plaza Accord, crafted to bring down the value of the dollar, spurred a surge in the value of the yen. That further undercut the viability of Japanese imports.

Toyoda deftly piloted Toyota through these challenges and then doubled down on the U.S. by introducing Lexus there with the launch of the LS 400 in 1989. While the top secret Lexus project was directly overseen by then-Chairman Eiji Toyoda, development began under Shoichiro in 1983.

The steps that led to the automaker's sterling reputation for quality, and to Lexus, all began with a car that was rejected by U.S. buyers as underpowered and unsafe for American roads.

In 2007, Toyoda recalled that Toyota's first import to the U.S., the Toyopet Crown, was a flop. That pushed his colleagues to listen and respond to the criticisms of U.S. buyers. "We owe a great deal of thanks to America for our sense of the importance of quality," he said in a September 2007 speech in Washington commemorating the 50th anniversary of Toyota doing business in the country.

In the 1960s, Toyoda played a critical role in establishing the company's famed quality control system, which eventually undergirded its brand identity as a builder of reliable cars.

That insistence on quality control enabled Lexus to mount its audacious challenge of the German luxury brands.

In developing Lexus vehicles, "We asked for precision that exceeded the limits of machine tools in those days, and the production technology side said it was impossible," Toyoda wrote in a multicolumn series called "My Personal History" for Japan's Nihon Keizai newspaper in April 2014.

"We bolstered cooperation beyond the departments and reviewed the precision of our tools, solving problems one by one. We could exceed Mercedes and BMW in precision of joint fitting by using robots on a mass-production line. Mercedes and BMW were processing it manually. It challenged the very norms of manufacturing."

Toyoda's father, Kiichiro Toyoda, founded Toyota Motor Co. in 1937 hoping to make cars, but the company's resources were soon diverted to making trucks to support the Japanese war effort.

Its rocky immediate postwar years were marked by financial crises and labour disputes, culminating in 1950 when the company's creditors forced Kiichiro to resign and the company to split its sales arm and its production operations into two separate companies. The Toyoda family had to step back, ceding management control to outsiders. Kiichiro had planned to return in 1952, but he died that March.

Shoichiro Toyoda joined the company in July 1952 as a board member at the urging of then-President Taizo Ishida, who wanted Toyoda to restore family continuity. But the Toyoda family was absent from the top post at the company until 1967, when Eiji Toyoda, a cousin of Shoichiro's father, reclaimed control as president.

Shoichiro Toyoda, a personable man with an insatiable curiosity and penchant for golf and motorsports, took the helm as president of the sales company in 1981.

The following year, the sales and production companies merged to form Toyota Motor Corp., with Toyoda as president.

Although Toyoda led the company into new overseas manufacturing ventures and new luxury segments, he typically did so cautiously, testing the waters with a joint venture or a new factory building a proven product.

Insiders often attributed the corporate cautiousness, at least in part, to the trauma of the banks demanding the split of the automaker in half in 1950. Certainly, Toyoda always insisted on a very conservative balance sheet, with massive reserves that effectively meant the automaker would never again have to do its banks' bidding.

He also worked, sometimes behind the scenes, to ensure his family's continued influence at the company.

After stepping aside as president, Toyoda was the automaker's chairman from 1992 until 1999, and he remained on the board until 2009, when his son, Akio Toyoda, took over as president.

Toyoda held the title of honorary chairman until his death.

Toyoda's brother, Tatsuro Toyoda, succeeded him for three years as Toyota Motor president.

But when Tatsuro fell ill and had to give up the president's post, it was, ironically, Shoichiro Toyoda who put the company in outsiders' hands, picking Hiroshi Okuda as the next president.

Okuda was followed by Fujio Cho and then Katsuaki Watanabe. When it came time to replace Watanabe, Toyoda was instrumental behind the scenes in helping position Akio Toyoda as the next president.

In public, Akio routinely downplayed his father's influence on his own decision-making.

But the two shared a house in Nagoya and saw each other on a regular basis. No doubt, Akio Toyoda's love of and deep understanding of cars trace their roots to his father. An avid race fan, Shoichiro Toyoda would routinely drag his extended family out to the track.

Shoichiro also made sure Akio pursued an MBA at Babson College in Massachusetts, a school that was originally founded to train heirs to take over the family business.

Akio, at a press conference after being named the automaker's president in January 2009, called his father the "flag" around which the company traditionally rallied in tough times.

Shoichiro's son then added: "I am not yet that flag, but I intend to do my best so that maybe 20 or 30 years from now, people may look back and refer to me as a flag."

Although the chairman's post is traditionally a ceremonial one in Japan, Toyoda never completely stepped away.

Even into his 80s, Shoichiro would sometimes show up at new-vehicle launches. He stayed on the sidelines, careful not to upstage the current management. He was simply putting into practice Toyota's guiding principle of genchi genbutsu — going to see things for yourself.

It was a lesson drilled into him by his father.

"He taught me, 'If you keep your hands clean as an engineer or head of a plant, nobody will work for you. An engineer's duty lies in genchi genbutsu,' " Shoichiro wrote in his "Personal History" newspaper series. "In the United States, I visited not only Toyota shops but shops of other brands. One perplexed owner asked: 'Are you really the president of Toyota?' "

He put that principle into practice time and again.

He served as chairman of Expo 2005, a World's Fair held in Nagoya, near Toyota Motor's headquarters.

"He waited in the long line with regular visitors to enter pavilions, maybe an hour in the summer heat, even though he was chairman, just to experience it from the customers' point of view," recalled one former Toyota executive. Shoichiro's takeaway: The queues needed mist sprayers too cool off the crowds. They were installed.

When Toyota slumped to its first operating loss in 70 years in fiscal 2009, Toyoda waded in to give outgoing President Watanabe a tongue-lashing at a February meeting of top brass.

"How many times have you made a mistake?" he demanded of Watanabe during the meeting, according to Bloomberg Markets magazine. He then rattled off a list of errors and chewed out Watanabe for adding big, expensive vehicles to Toyota's lineup.

Before joining the automaker's board, Toyoda worked a variety of jobs within the Toyota Group, including a stint at a fish-processing factory on Japan's northern island of Hokkaido. He also helped set up a construction subsidiary specializing in precast concrete housing to rebuild his war-ravaged country.

He had witnessed World War II's destruction firsthand. His family's house in Tokyo burned down during American air raids on the Japanese capital.

U.S. B-29s also bombed Toyota's main plant on Aug. 14, 1945, the day before Japan surrendered. At the time, the plant was in a town called Komoro. But the name was later changed to Toyota City in honor of its biggest employer and most influential family.

By 1961, Toyoda had risen to managing director at the carmaker.

His formative years were spent brainstorming new automotive technology, sharpening quality control and streamlining factory management.

One of Toyoda's early tasks was spearheading an audacious plan in the late 1950s. The goal: Build an assembly plant with monthly output of 10,000, nearly five times the 2,000 vehicles Toyota was churning out at the time.

The resulting Motomachi plant, completed in 1959, remains a backbone of the carmaker's Toyota City manufacturing hub. It now makes 118,000 vehicles a year, including the Crown and Mark X sedans and Estima minivan.

"I worked on the construction with all my might," Toyoda wrote of the plant in his "Personal History" newspaper series. "As it was our first dedicated passenger vehicle plant, problems arose one after another. But we solved them by putting our wisdom together."

In 1994, Toyoda was named chairman of Japan's Keidanren, or Federation of Economic Organizations, Japan's most influential business lobby. He was the first auto executive to hold the post, a sign of the automaker's coming of age and influence.

Even then, he kept fighting — or more often, defusing — trade wars with the U.S. In 1995, the country demanded Japan buy more U.S.-made auto parts and threatened tariffs.

Toyoda, in his dual role as Toyota and Keidanren chair, flew by helicopter from Nagoya to Tokyo for eleventh-hour talks with then-U.S. Ambassador Walter Mondale.

"I told the ambassador about our investment plan in the United States, and he got very interested," Toyoda wrote in his "Personal History" series. "In the end, both the U.S. and Japan settled down at the last minute. The key was the voluntary action plan," under which Toyota laid out its plans for purchases of U.S. auto parts and for production of vehicles in the country.

The next year, Toyota announced a new engine plant for West Virginia.