Canadian Manufacturing

Toyota’s Texas move more about culture change than tax breaks

Some experts say Toyota is after people with fresh ideas to shake up its culture and reverse a five-year slide in market share

DETROIT—Toyota’s move from Los Angeles-area offices to a new U.S. headquarters in Texas is likely about more than just tax incentives.

The company has been criticized for turning out dull-looking cars with appliance-like handling. Some experts say Toyota is after people with fresh ideas to shake up its culture and reverse a five-year slide in market share.

“Texas is known for being bold. It’s not a subtle state,” says Art Wheaton, an auto industry expert at Cornell University.

Texas lured Toyota with $40 million in incentives. And the 3,000 employees moving just north of Dallas over the next two years will be closer to factories in Texas, where Toyota believes they can make faster decisions.

Still, at least for the short term, the Japanese automaker’s U.S. operations will remain heavily dependent on California, where it sells 22 per cent of all cars, according to consulting firm IHS Automotive. Toyota had three of the top five bestselling vehicles in the state last year: the Toyota Prius hybrid, the midsize Camry and the compact Corolla.

Nationwide, however, Toyota’s market share has dropped almost four percentage points from 17.8 per cent in August of 2009. Each market share point is worth about 160,000 vehicles.

However, Wheaton says Toyota has been stymied by mundane designs and lacklustre marketing for at least a decade. Since many workers won’t relocate, the company will get an influx of talent and new thinking.

“I think it’s saying ‘OK, we need a fresh start. Let’s have some new ideas,”’ he says.

When Nissan changed its U.S. headquarters from California to Nashville in 2008, 68 per cent of the workers refused to move.

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Toyota knows that number, Wheaton says, and figures on getting new engineering, marketing and other talent from Texas universities and its tech and aerospace industries.

Nissan changed after the move. Its top-selling car, the midsize Altima, got a bold design and crisper handling, and is “one of the vehicles that is eating Toyota’s lunch,” Wheaton says. The Altima’s share of the midsize car market rose by 0.5 percentage point to 8.9 per cent, according to AutoData, while the Camry’s remained flat at 11.3 per cent.

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