EARLY this week, Toyota Motor Philippines Corp. (TMP) threw a thanksgiving party for the motoring media to mark its 26th anniversary.
At the event, the company also celebrated other milestones: the launches of the all-new Corolla Altis, the new Innova, the new model Wigo, and the all-new Yaris; the sale of 8,000 units in March, 9,000 units in May, and an unprecedented 10,000 units in August, with the locally produced Vios and Innova posting their highest sales ever in July with 2,480 units and 1,614 units, respectively; TMP’s Santa Rosa plant produced a total of 3,998 vehicles in a single month (July), setting a new production output record despite the calamity brought about by Typhoon Glenda; the plant has also assembled a total of 24,330 units, year-to-date, 33 percent higher than the same period in 2013. As of this writing, it seems highly likely that, by the end of the year, TMP will capture its 13th consecutive Triple Crown or leadership in the passenger car, commercial vehicle and overall sales.
Aside from its marketing and manufacturing feats, TMP boasts other noteworthy endeavors, such as the TMP School of Technology or TMP-Tech, which it established in 2013 to produce world-class automotive technicians for Toyota’s global dealer network. The school was the official site for the Technical Education and Skills Development Authority’s 2014 Philippine National Skills Olympics on Automobile Technology in April. In July the school was also highlighted by President Aquino during his State of the Nation Address. The company also added more life to the local motorsports scene through the Toyota Vios Cup, a concept of grassroots racing, where all interested nonprofessionals can compete.
Setting TMP’s direction
SOME quarters aver that the remarkable achievements of the country’s leading car company are attributable to the immense popularity of the Toyota brand. There are a greater many, however, who say that TMP’s latest successes have a lot to do with the man who is tasked with setting the direction of the company: Michinobu Sugata.
Sugata-san, as colleagues and industry insiders fondly call him, began his watch as TMP president in January 2010 after stints as staff member, Africa Division, Toyota Motor Corp. in Tokyo, Japan, from 1983 to 1991; assistant manager, Accounting Division, from 1994 to 1996; project general manager, Asia Division, from 2001 to 2005; and executive managing coordinator, Marketing Division, Toyota Motor Thailand Co. Ltd., from 2006 to 2008.
Sugata-san, who graduated with a degree of Bachelor of Economics from Kobe University in 1983 and earned his MBA from the University of Washington’s Graduate School of Business in 1993, also served a tour as senior vice president, Comptrollership Division of Toyota Motor Philippines Corp. from 1997 to 2000, an experience that would prove useful in his future role as president of TMP many years later.
“It was in late 2009 when I received news from the Toyota headquarters in Japan, that I would be moving to the Philippines to become TMP president, effective January 2010. I was working then at Toyota Motor Asia-Pacific, Singapore and our regional office for Sales and Marketing. I thought at that time that the decision of Toyota headquarters seemed to be based on the fact that I once worked at TMP as Comptroller from 1997 to 2000. Of course, I personally felt honored to take the helm of TMP, and my wife was also very happy to hear that we would be staying in the Philippines again,” Sugata recalled.
“I was told by my boss then to set the direction of TMP for the next 10 years. As soon as I came here, I realized that my duty should be to accelerate the momentum of TMP’s growth within a few years and to pass on the burning torch to my successor. On top of that, I knew it was imperative for me to develop the Filipino human resources to ensure the sustainable growth of the company,” he also recounted.
THE pragmatic Sugata knew that his reassignment to Manila would not be a proverbial walk in the park. “As soon as I took the responsibility as TMP president, one of our dealer principals approached me and said that I would encounter so many headaches in the Philippines. That was true. Probably, that is because the Philippines is one of the emerging markets, full of growth potential, but with many unexpected changes. The country is really dynamic, unlike the developed countries,” he shared.
Despite the formidable challenge, Sugata remained unperturbed. “The Toyota headquarters values local autonomy and the decision-making process of TMP as a part of the Toyota Way. Therefore, I have been given ample freedom to build or change things. TMP officers and team members are well equipped with the knowledge and practice of the automotive business, having long experience in more than its 25-year history. What I did was to provide direction on how we can become better in doing business and set the long-term goals, and I think that they have successfully accomplished them,” Sugata stated.
“Back in 1997 to 1998, we were hit by the Asian Currency Crisis, and I was TMP comptroller then. The Philippine Peso plunged from P26 to a low of P41 per US dollar. Our sales drastically dropped, our imported parts and material cost shot up, our cash ran out, and our borrowings went up to as much as P4 billion. Our suppliers and dealers were badly hit, as well. However, with the strong unity of Team Toyota Philippines, we were able to overcome the crisis. Now, we have different kinds of challenges, but I think they are more manageable than the crisis then,” he added.
Liberal, independent car buyers
INDUSTRY pundits have said the Philippine automotive market is small in terms of volume compared to the others in the region and the world, but it is still very competitive, and it has certain characteristics that make it unique. Sugata agreed: “The auto market in the Philippines is smaller at this moment than those of our neighbors, like Thailand, Indonesia and Malaysia. There are some common characteristics among the Asian people, including the Japanese, but the most striking difference, in my personal opinion, is that Filipinos are more liberal and independent in choosing their cars. In other words, their brand loyalty to Toyota tends to be somewhat lower than the other Asian nations. Toyota is, I believe, at the top of their mind, but they don’t necessarily choose Toyota in purchasing their vehicle. In that sense, the competition is tougher here than in other nations.”
In most companies, there is often tension between the finance and marketing sides of the business. Sugata’s background is in finance, yet his current position requires him to take an aggressive stance when it comes to marketing and promotion. This is why in management circles, Sugata-san is considered somewhat of an oddity albeit in a good and respected sense.
“Knowing the real essence of business acumen, I want marketing people to be equipped with basic finance knowledge, and finance people to also understand the basic principles of marketing. I am encouraging human-resource exchange between these two divisions internally at TMP to broaden their scope, just like my learning experience in both function areas at TMC,” Sugata explained. “As president, I try to maintain a good balance between marketing and finance, depending on the market situation. Generally speaking, when marketing is too strong in the company, the mood of the company tends to be too loose. On the other hand, when finance is too strong, the mood of the company tends to be stagnant. Thus, I steer the whole organization, including marketing and finance, toward the right direction in the short and medium term.”
Outperforming TMP’s records
AS with most astute leaders, Sugata subscribes to a philosophy and management style that he has developed from his vast experience.
“I have always been thinking about how we can delight our customers further in the Philippines with Toyota. And so, I make keen observations as a customer and learn many best practices from other industries. Then, I try to apply some of them in our business on top of so-called traditional ways. I am personally very open to any new idea worth trying. Maybe, that kind of my attitude looks somewhat nontraditional, but the essence is simply to please our customers,” he shared.
Although things are looking rosy for Toyota in the Philippines, Sugata-san is not putting his guard down. “Keeping the top position is more difficult than catching up with the one on top, because even the number one company has many weaknesses, which followers can take advantage of. That is why, I often tell my team members to try to beat TMP and outperform ourselves,” he disclosed. “The auto market in the Philippines will continue to grow but the customers’ preference for products will change according to the rise in their income, and the possible changes in their lifestyles, as well as values. Therefore, new products to be brought here in the future should capture such changes.”
Should change come, as it inevitably will, TMP seems ready for it. “We currently have 44 dealer outlets, including Lexus Manila. From just 28 outlets at the end of 2009, we were able to establish an additional 16 since the time I was assigned here. We still have plans to expand our dealer network to around 70 outlets by the year 2016 to fully cover the nationwide market,” Sugata intimated.
A well-rounded individual
JUST like the samurai of old, Sugata’s world does not revolve solely around the ways of war—or in this case, business. He is a well-rounded individual, who always finds time to spend with his wife and two children and pursue interests, such as golf and reading. He is also an avowed Beatles aficionado, who can belt out a mean rendition of “Hey, Jude.”
“After years of experience as president of TMP, I have adjusted my way of thinking and have come to understand that many changes take place every day, and that is why I am able to grow as a person, as well as a businessman,” he added.
When asked what he would remember most about his time in the Philippines, he paused to carefully collect his thoughts before saying, “My fondest memories would be the Filipino people I have met inside and outside TMP. All of them are super-friendly, kind, supportive, and warm-hearted. Though it is sad for me to think about the time when I have to end my term and leave the country, I am certain that I will continue to possess deep respects for the people here throughout my life.”