Camry drives Toyota toward revival

An hour before the awards ceremony was set to begin, Toyota Korea was informed that its Camry would be crowned the 2013 Korea Car of the Year.

It was a stunning feat for a foreign brand ― it was unprecedented for an imported car to grab the honor ― and especially for Toyota which had stood resilient against the widespread doubt that had shrouded the release of the vehicle last January.

Toyota had pretty much known that its hybrid compact Prius would win the “green car” award, but did not expect the Camry to do so well.

Toyota Korea president Hisao Nakabayashi, who spoke in fluent Korean in his winning speeches for the Lexus GS and Prius in sub categories, asked to speak through an interpreter when the Camry was named as the year’s best car to more accurately relay his emotions, which ran quite high.

“We will do our best. Thank you. I feel great honor to win this award. It is really unexpected,” he said, tearing up during the awarding ceremony held at a Seoul hotel last week. 

Indeed, the Camry has been good to Toyota, becoming the second-most sold import car following BMW’s 520d sedan last year. The award was in recognition of such achievements.

Hyundai Motor Group was caught by surprise at the Camry’s rise, according to both industry watchers and insiders at the carmaker.

Since the Korea Car of the Year award was established by the Korea Automobile Journalist Association in 2010, Hyundai had swept the awards. In 2011, Kia Motors’ K5 took home the top prize, in 2012, it was Hyundai Motor’s i40.

The humiliation for Hyundai was made more complete, some critics said, as Hyundai’s Santa Fe sport utility vehicle and BMW’s 3 Series were chosen for a “special award,” to soothe them for having lost to the Camry by a “razor-thin margin.”

Having been tipped off about Toyota’s victory, no Hyundai officials attended the event.

“We are perplexed. It would been a lot better if a Korean brand won the top prize,” said a Hyundai official, declining to be named.

Dramatic turnaround

Toyota’s victory was more significant because it was so unanticipated.

“When we pledged to sell 600 Camrys every month, skepticism was prevalent,” said Kim Sung-whan, a Toyota Korea spokesperson. “Toyota was not on the shopping list of Korean consumers at the time.”

At the January launch of the new Camry last year, iconic Toyota CEO Akio Toyoda expressed his support and passion by unveiling the car in person.

But the global business environment could have not been worse.

Already hit hard by the financial crisis sparked by the collapse of the U.S. investment bank Lehman Brothers in 2008 and the massive recall of its vehicles in 2009, the carmaker was struggling to recover from the aftermath of the devastating tsunami in 2011.

Toyota decided to take the matter into its own hands.

To take advantage of the favorable won-dollar foreign exchange rate, Toyota imported all Camry vehicles that would be marketed in Korea from its U.S. factories. The Korea-U.S. free trade pact helped keep prices down.

The Korean unit also started a TV commercial featuring actress Kim Tae-hee as a passenger, not a driver, to add a more affectionate image to the flagship classic sedan ― an idea that came from the Korean chief, Kim said.

One year later, the Camry was next to only BMW’s 520d sedan as the most sold imported car. In December, Camry reached the peak to become the monthly top seller.

During the same period, Toyota’s car sales also soared, more than doubling to 10,795 last year from the 5,020 the company sold in 2011. Despite the strong presence of German carmakers here, Toyota’s market share increased from 4.78 percent to 8.25 percent.

Winning the car-of-the-year title put the finishing touch on Toyota’s stellar achievement in Korea, the home turf of its global rival Hyundai.

Japan’s national television channel NHK reported the awarding event on the scene, while the news was features on the front page of Yahoo Japan all day long.

Ripple effect

Toyota’s revival appeared to inspire other Japanese brands that have been struggling from sluggish sales in recent years in Korea.

“We were definitely encouraged by the award. It will hopefully renew the image of Japanese carmakers overall,” said a PR official of a Japanese car brand, who wished to remain anonymous. “We are planning aggressive marketing activities this year.”

The weakening Japanese yen is another positive factor for Japanese brands here.

“It is too early to say about the business impact from the recent weak yen. We need to watch the trend at least for six months,” said the official.

But Toyota’s Kim said the Korean unit has no plan to make major changes in its operation for now, including pricing policy.

“Toyota now produces much of its cars in overseas plants. The volatile currency would not affect our business policy in the short term,” he said, adding that the company would continue its offensive with U.S.-made models such as Rav and Avalon.

Hyundai, which is losing market share gradually to import brands at home, is also expected to step up efforts to respond to the sales recovery of Toyota and other Japanese carmakers this year.

“If the yen continues weakening, Japanese carmakers would import Japan-made cars as well as U.S.-made models. That is likely to lead to price cuts,” said Lee Won-hee, Hyundai’s chief financial officer at an earnings call on Thursday.

Hyundai that has already cut prices of flagship models, pledged to roll out Korea-exclusive models to better appeal to domestic demands, he said.

By Lee Ji-yoon (jylee@heraldcorp.com)