Shaking Motor City’s Foundation

It is a scorching Labor Day weekend on the eve of the Sony HD 500 Nascar race, and the vast infield RV campground of the California Speedway is jammed fender to fender with motor homes, pickup trucks and beery cheer. Yet the scene is as barren as the distant lower tract of the San Gabriel Mountains, which serve as a backdrop to the raceway. Barren, that is, in the eyes of Jim Farley, group vp, marketing at Toyota Motor Sales.

“There are 20,000 people out there, and I only saw two or three Toyotas,” lamented Farley, 44, whose brown locks are cut in a schoolboy wave, creating the impression of a man too young to oversee marketing at such a hard-charging auto giant, a California titan that has made hand-wringing part of the daily routine in Detroit.”I want to be involved here with Nascar, [but] not just as a banner flopping in the wind,” Farley says, nodding at a bevy of flags doing just that. “Those days are over for us. Now, maybe we can have a Toyota mayor of the infield, a Toyota gaming tent for kids, a comedy tent. We can have Domino’s pizza for these people who are camping out here, and Toyota will pay for the delivery.”

From his perch in skybox No. 122, the suite of friend and leading Toyota dealer Greg Penske (son of legendary race car driver Roger Penske), Farley faces a curious puzzle. Despite a Toyota sponsorship that dates back to 2000, Nascar fans are by no means ready to embrace a car brand that is widely perceived as a usurper in the U.S. auto industry. In fact, he seems genuinely perplexed as to why Toyota, now the nation’s No. 2 car seller, isn’t more popular among the blue-collar set.

If Farley and his charges have their way, however, that is about to change.

While U.S. automakers in recent weeks resorted to talks of historic global alliances, aimed in part at combating their relentless Japanese nemesis, Toyota was well along in its latest push to market itself as an “American” brand every bit as apple pie as Ford or Chevrolet. Cloaking itself in Nascar’s populist aura is just the beginning. In the coming year, Toyota will use its growing stable of sponsorships to put its vehicles front and center at county fairs, country music tours and football games, all the while further weaving its brand into the fabric of American culture.

An American Tale:

All Roads Lead to Toyota

The two-lane country roads that stretch across West Virginia, Ohio and Kentucky are marked periodically with billboards thanking the locals for making Toyota factories at home in those rural environs. Other similar advertisements dot highways all over the U.S. These are essentially bragging-rights posters, with a single color and a simple message. In one ad, the number “386,000” sits atop the copy: “Kilometers to the moon. U.S. jobs created by Toyota.” Another features the number “10” and the explanation, “Speed limit in 1900. Toyota plants in the U.S.”

The American campaign, via Dentsu, New York, has been in place since the ’90s, but it is enjoying an enhanced profile: Ford and General Motors continue their freefall, while Toyota mercilessly scoops up market share from their missteps.

There’s new spin on the PR effort, too, including ad buys in national newspapers. For example, a recent ad in USA Today showing a picture of a formidable ski slope reminds the country that “while Utah has some lovely ski trails, we go for the air bags.” Translation: Toyota buys its air bags from Autoliv, an international parts manufacturer with North American headquarters in Ogden, Utah. If that message is too obscure for some consumers, a little information box shaped like a lift ticket offers: “U.S. Operations: annual purchasing, $28 billion, total jobs, 386,000.”

“Our competitors have tried to portray us as a large company from another place, as a foreign company, and it is just not true,” says Farley, who was reared in the small farming town of Alma, Mich., one of four children born to a local banker and his homemaker wife. “Toyota has 1,200 dealers in the U.S., hundreds of suppliers here, and we are so much a part of America, [our rivals] can’t play that card anymore. It seems that every obstacle that is placed in front of us makes us better. So to those competitors, I have to say, ‘Thank you.'”

While Farley’s ambitious red-white-and-blue repositioning of Toyota is a work in progress, the automaker’s gaudy record of accomplishment is firmly in the books. Since its last nod as Adweek sister publication Brandweek’s 2002 Marketer of the Year (an award given to Jim Press, now evp, COO), Toyota has continued to assemble a masterful product portfolio and now boasts a solid performer in almost every vehicle segment. Through August, Toyota’s overall vehicle sales were up 11 percent to over 1.7 million units, heartily outpacing those of General Motors (whose sales were down 12 percent vs. 2005), Ford (down 9 percent) and Chrysler (down 8 percent) in the same period.

What’s more, the road ahead looks wide open for Toyota, which has ranked second in global sales for three years running. In July, the company surpassed Ford in monthly U.S. sales for the first time ever, as it continues to encroach on GM’s top spot. Toyota continues to narrow its market share gap with the Big Three in the U.S. as well. Notably, Toyota moved ahead of DaimlerChrysler this year, and to within less than 10 percentage points of GM, closer than at any stage in its history.

How best to explain Toyota’s achievements?

At the core of its success is a power of perception unmatched in the industry. Toyota studies the auto market like no one else. “Better than the Big Three,” says Erich Merkle, director of forecasting at auto consulting firm IRN in Grand Rapids, Mich.

Toyota is acutely aware of its place in the industry and is smart enough to play to each specific demographic in its marketing, and does it in a very subtle way, says Todd Turner, principal analyst with Car Concepts, Thousand Oaks, Calif.

“Toyota sees where it wants to be five years from now and knows how to get there,” Turner says. “It is the Steady Eddie of the auto industry.”

Cars for All Seasons

Well before the recent flurry of “green” marketing hit the U.S., there was the Prius. Toyota introduced its star hybrid sedan in 2000, in a move serenaded by both Hollywood players and national politicians seeking an environmentally friendly image. The Prius, which combines an electrical motor and a gasoline engine in a plain-Jane design, has established Toyota as the dominant hybrid producer—and put Detroit in the all-too-familiar position of playing catch-up. While the hybrid market remains small, it is growing: Projected sales in the U.S. for this year are 262,114, per J.D. Power and Associates, or 1.5 percent of total vehicle sales. By 2013, the figure is expected to reach 934,500, or about 5 percent of the U.S. market. In 2005, hybrid versions of the Toyota Camry, Highlander SUV and Lexus GS 450h SUV joined the company’s green fleet.

Want diminutive, gasoline powered and youth oriented? How about the Scion, which will move close to 185,000 units this year. The division, which is luring impressionable young consumers with an array of after-market supplies—such as colored brake pedals and a design-your-own-car Web site—posted an all-time monthly high with 19,252 units sold in August, at a time when most carmakers can barely lure buyers with their endless array of discounts and incentives. Scion has become the king of the feeder brands, with a loyalty rate of 50.3 percent, nearly double that of its closest competitor.

The Scion-influenced Yaris subcompact has posted sales of over 44,000 units since hitting showrooms in March with a sticker price around $12,000, giving Toyota a platform for one of its strongest marketing campaigns of the year. The Yaris effort featured seven 10-second “mobisodes,” or video clips, that transmit over mobile phones, as well as banner-ad games that allow participants to do interactive combat using Yaris models.

“Both Scion and Yaris are textbook examples of how Toyota is able to get a consumer at a younger age and see that migratory path,” says Robert Passikoff, author of Predicting Market Success and president of consultancy Brand Keys, New York. It’s a path that winds like the Yellow Brick Road through the maze of Toyota value offerings. “Then, guess what?” says Passikoff. “We have Lexus.”

Lexus is the nation’s top-selling luxury marque for six years running, propelled this year by the redesigned IS series, an entry luxury sports sedan and the RX 330 SUV.

“Toyota has a combination of solid marketing and solid products,” says George Peterson, president of AutoPacific, an automotive consulting firm in Tustin, Calif. “They check all their boxes. From Scion, which does things guerrilla style, to the Toyotas, which rely on the old-school marketing plan, they are very workmanlike. They have an entry in every segment.”

This year, Toyota is on track to sell 2.5 million vehicles, a 13 percent increase over last year’s record 2.2 million units. Toyota’s car sales, paced by the Corolla, were up 7.4 percent through August, while light trucks, led by the newly retooled RAV4, were up 12 percent. The company, which came to the U.S. in 1957 with an anemic sedan called the Toyopet Crown—and first served notice to the gas- guzzling U.S. auto industry in the 1970s with compact cars like the Celica hatchback—is now embarking on a quest to top the truck segment with its resized Tundra. Built in San Antonio, the vehicle is about to receive a 2007 launch more American than baseball and beer.

An Ambassador Makes the Pitch

Against that winning streak, Farley arrived at the California Speedway last month, sweating in 103-degree heat, pressing the flesh as he tries to make sure Toyota is, to borrow its two-year-old tag, “Moving forward.”

Says Farley: “Good sales months are embarrassing. There is always something we can do better than we are doing [right] now.”

He administers that proclamation as he rides a golf cart to the hospitality tent of Caterpillar, a leading manufacturer of construction and mining equipment. As it pursues more of the workingman audience, Toyota would like to become as much a fixture on construction sites as a Caterpillar bulldozer. A meeting of the minds is, in fact, brewing.

“We want to partner with companies that can help us and vice versa,” Farley explains. He points to UPS and Domino’s Pizza. These are the sort of all-American corporate names that Farley hopes will define the future of Toyota’s co-branding movement.

Farley clearly seems the perfect ambassador for the job. In a Nike golf shirt, white jeans and sneakers, he is a business sharpie cloaked as an off-duty tennis pro. He glad-hands Greg Towles, Cat’s director of motorsports, and the two stand in the glaring midday sun, talking business.

More than anything, Farley seeks to lend Toyota greater credibility in the hearts and minds of Americans. In addition to gaining approval from the earthmoving set, that means earning applause from football fanatics and, perhaps most important, a bit of love from the Nascar crowd.

“We want to be part of that authentically, not just by writing a check and having some trucks out there,” Farley says, motioning to Towles, clasping and unclasping his hands while fiddling with the ID badge around his neck. “We will over-invest in broadcast media, and in exchange, we need some help with Nascar. We have two choices: We can do what every other car company does and you don’t even know me, or we can get together creatively.”

Towles noddingly listens to the earnest pitch, and the two shake hands, parting with an agreement on a future meeting. “Cat is an iconic brand, like Harley,” Farley says as the golf cart ferries him to this next stop, the UPS hospitality tent. He’s still fidgeting. He can’t wait to deliver the same pitch to the forces waiting there.

Oil in His Blood

Farley was made for the deal. He’s been a car guy from the time he rebuilt a ’66 Mustang at the age of 15 to the moment he took the helm at Scion in 2002, then rose to the vp slot at Toyota in 2005. His latest promotion to group vp and a corporate officer at Toyota Motor Sales came just three days prior to this race. “I feel really lucky to work at Toyota,” Farley says, unprompted.

Farley travels three to four days a week, taking him away from his wife, Lia. He gets four to five hours of sleep a night and receives between 200 and 300 e-mails a day. He sorts those missives by urgency, using the weekend to catch up on those deemed least pressing. His is a life disguised as a job, where the two have very thin walls.

“Jim is very intense. Yet he has the ability to laugh at himself,” says Irv Miller, group vp of corporate communications, to whom Farley reported in the mid-90s when Miller was chief of advertising and marketing while Farley headed up truck marketing.

At the moment, Farley is keenly focused on the six-year-old Nascar alliance, which launched when Toyota entered the Goody’s Dash Series. In 2004, the company, represented by the Tundra, entered the Nascar Craftsman Truck Series.

The affiliation will be cemented next year when Toyota competes in the Nextel Cup and Busch series. It is, in many ways, an unlikely pairing. One side represents a new, progressive frontier in American business; the other, a traditional-values-themed spectator sport that’s historically been blue collar and red state. To win over his audiences, Farley will need to use every ounce of his passion for racing, a love that stems from his childhood memories of watching Mario Andretti and Al Unser on ABC’s Wide World of Sports.

Toyota’s racing foray fits perfectly into its quest for domination in a world in which the pickup truck serves a vital role in work and at play. Its weapon of choice: the 2007 Tundra, an expanded version of the truck it has sold since 1993, with limited success.

By the time the new Tundra arrives in February, dealers will have reconfigured their showrooms and service bays to accommodate the monstrous truck, spending billions of dollars in training, construction and marketing. Toyota will offer over 50 in-house accessories specifically for the new vehicle. Consumers who pay attention can get a new snowplow, ladder rack, toolbox and lift gate—all from Toyota.

Farley’s challenge is to make the connections that enable Toyota to authentically operate in a territory in which size matters and the trademark Toyota performance may feel dissonant to Nascar-lovin’ folks, who will surely wonder what Toyota is doing in such a Toby Keith world.

The Tundra, considered by many to be the most important and risky launch in the company’s U.S. history, needs Nascar just as it needs anglers. Earlier this year, promoters ushered in the Toyota Women’s Bassmaster Tour Angler of the Year program, which rewards the top female angler on the WBT trail with a 2007 Tundra.

Toyota also needs to reach fans of that testosterone-laden pastime, football. Toyota and Lexus have joined with ESPN’s Monday Night Football for a multiplatform promotion that combines sponsorship of halftime shows, Web-based content and surround programming on ESPN radio and broadcast networks. Toyota also will sponsor a sweepstakes dangling $50,000 for high school football programs tied to the new NBC series, Friday Night Lights, centered on a passionate team from Texas.

Toyota has devoted a space at its Torrance, Calif., headquarters for the Tundra campaign, decorated as a blend of Texas prairie and construction site, and featuring murals of hay bales and exhibits of bricks, I-beams and two-by-fours. 84 Lumber, a major supplier to professional builders, will be a prominent partner. It is a liaison similar to the hoped-for alliance with Caterpillar, giving the Tundra some construction cred while allowing 84 Lumber to draft on the wake of the auto giant.

The risk is rejection of Toyota as a brand out of its league, pushing a Japanese product in an arena that couldn’t be more American. Toyota’s truck share has gradually risen over the last five years, from 3.7 percent in 2000 to 6.3 percent through August, according to J.D. Power. Still, this is the one last frontier owned by American automakers, namely Ford, whose F Series sells more units than any other vehicle in the U.S., and GM, led by the Chevy Silverado.

When Toyota pitched the Tundra plan at a dealer meeting in San Antonio in August, “there wasn’t a skeptic in the house,” says Jeff Kmiec, vp, marketing at 84 Lumber, in Eighty-Four, Pa. “Toyota clearly has a long-term vision for the U.S. They are very focused on how to guarantee success for the Tundra.”

The Tundra endeavor, and its attendant “We’re an American brand” theme, is a challenge taken on by a company so accustomed to achieving its goals, it appears to be bored with its lot in life.

And when failure does strike, as it did last year when the automaker had more recalls—2.38 million—than sales in the U.S., it assumes the character of a random home intruder rather than a permanent house guest.

Case in point: When news of a potentially faulty lift gate in the Sienna minivan hit in August, Farley shot an e-mail to communications exec Miller. The press, especially in Detroit, where Toyota has cloven hooves, was gleefully reporting the miscue.

“Should we do something?” Farley fires off on his BlackBerry.

“No,” came the response from communications chief Miller. “We do the right thing every day.” That Farley was steeped in the issue was key to Miller. “It is not normal to see a marketing executive who sees what is potentially a service and parts issue come up and comment on it,” he says. “From his perspective, it was customer oriented all the way and he wanted to make sure we were on the issue.”

Farley, meanwhile, remains humble about his goals for Tundra. “We are the underdog, still,” he says. “Being an icon like Ford and the F Series, I can’t be so arrogant to say we can top them and sell 800,000 Tundras. Our expectations are much lower.”

If there is a hint of false modesty in those words, there is no such humility in Toyota’s aspirations regarding its bold marketing plan. County fairs, Nascar, country music sponsorships of the Brooks & Dunn concert tour: Toyota aims to be an integral part of it all. If one has to go to work at the construction site, why not get there in a Tundra? If it’s a Toyota in the family driveway, well, there’s Camry, RAV4, Highlander . . . you get the picture. And Farley, with all of his determined sweat and youthful exuberance, loves the game.

“At the end of the day, all good marketing comes down to people,” he says following his meeting with Caterpillar, clutching a Miller Lite in the skybox. “We don’t want to be just another car company. My job is to change people’s minds.”

He adds, perhaps with an implied jab at some high-profile rivals: “I can’t do that on TV. I need to be out here, talking to people.”

Some minds are already made up. That group would include the large number of consumers who are convinced Toyota remains a model of reliability. It is what J. Mays, Ford’s global design chief, calls the “fear of being left by the side of the road” factor, which goes a long way toward explaining why the Camry has been the best-selling car in the U.S. for close to a decade.

“It’s not much to look at,” Mays says earlier this year, speaking of the Camry. “But it’s the car you want your mother or grandmother to be driving because it won’t leave them stranded.”

In April, Toyota relaunched the staid sedan with a marketing push of $175 million, more than the company spent to launch the first U.S.-made Camry in 1998. A theme of “When does a car become more?” highlights the dramatic overhaul of the Camry, whose beefed-up fenders, rounded rear panel and optional V-6 engine sent consumers to dealers in droves.

One 30-second spot is a contemporary showcase for the new Camry. Sleek imagery alternates between shots of the car cruising down narrow streets and an open highway. Closeups of young drivers are interspersed with factory images of pistons hammering. “At what point does a car become more than just glass, rubber and steel ? … When does it become something you love?” the voiceover asks. Later, the tag hits: “It’s time to move forward.”

The campaign was an apparent success, with Camry sales on track to hit 453,000 units this year, a 5 percent gain over 2005. Back in Torrance, where standards are high, however, it was deemed a low point.

“It didn’t break through as we had hoped,” says Kim McCullough, Toyota corporate manager of marketing communications. “I don’t think the commercials [from primary agency Saatchi & Saatchi, Los Angeles] were as good as we had wanted.”

Adds Farley: “I wish I could say I was more proud of our promotional plan, but it was more like Brooks Brothers. I do understand, though, that you can’t do a Yaris campaign on the Camry. The product in this case was better than the campaign.”

To dealers, however, that’s what matters most.

“The new Camry is so radically improved that I can’t sell them fast enough,” says Paul Pashley, sales manager at Lynch Toyota in Manchester, Conn. “They took away the frumpiness of the last two models, and the demand is incredible. And there is no end in sight.”

After selling Fords for 14 years, Pashley made the move to Toyota six months ago. “It’s the best move I ever made,” he says. “Toyota makes cars that customers want to buy, which Ford doesn’t. Toyota is nailing it. To sum it up: They make cars that don’t suck.”

The Future: Can Anyone Stop Toyota?

In 2006, the U.S. auto industry stands at an epic crossroads. Leaders of the Big Three have been desperately searching for an answer to a litany of woes, looking for help wherever they can find it. That has meant alternatively testifying before Congress in search of billions of dollars in government aid, or testing the waters on some previously unthinkable mega mergers. If GM’s CEO Rick Wagoner and Nissan chief executive Carlos Ghosn seem an unlikely tandem, imagine the double take around the globe when talk of GM merging with Ford hit the automotive press.

Toyota simply keeps its eye on the future, says David Murphy, president of Saatchi, L.A. “Toyota takes a long-term view on everything,” Murphy says. “There is never a sense of panic there. They know what they are going to do tomorrow, the next day and the day after.”

With Farley on board, the future is not what it used to be, he adds. “Jim brought dynamism and speed,” says Murphy. “Jim wants to get to the future faster. He wants to provoke the system, as in, ‘Don’t accept the way things have always been done in the company.’ He has a profound respect for Toyota and the Toyota way, but he’s no cheerleader.”

Adds Saatchi’s Peter Kang, a key man on the Yaris campaign: “This client is incredibly refreshing. Toyota pretty much gave me free reign on the Yaris, but I had to come back with proof that what I wanted to do makes sense. They are incredibly open to ideas.”

On the Tuesday after the race, Farley came into his office around 7 a.m., dressed in an ill-fitting khaki suit. As he waxed on the psychology of the Prius (“How many people are willing to buy a car to clean the earth? A lot, but not enough to buy 170,000 cars a year”) and more possible event marketing for Tundra (“We can take a page out of Yaris and spend more at awards shows and talent contests”), it was impossible not to know the future.

It might be lonely at the top, but as Toyota well knows, it isn’t on top—yet. At GM, the wind whistles through the towers at its Ren Cen headquarters in downtown Detroit. It’s an uncharacteristically chill breeze from the West Coast, borne of insecurity in Torrance, but also one that is ready to shake that Motor City institution.

“There is a huge risk in being where we are,” Farley says. The man nicknamed “Jimmy Car-Car” during his Midwestern childhood, who rarely sits still, isn’t about to allow Toyota to rest on its laurels.