Toyota looking to enter high-end sports car market

As the world's largest carmaker tries to rebuild its reputation for quality after record recalls, Toyota President Akio Toyoda has said he wants to add more fun to his cars.

By Makiko Kitamura and Yuki Hagiwara

Bloomberg News

Maurizio Raffone bought a Toyota Prius hybrid for its top-of-the-line fuel efficiency. In his current search for a new sports car, he said the Japanese carmaker hadn't sprung to mind.

"Would I consider buying a Toyota high-end sports car?" said Raffone, a London-based director at Commerzbank AG. "I might think about it, but ultimately I'd choose something with a trident, a prancing horse or a bull on its hood," he said, referring to Maserati and Ferrari and Lamborghini.

As the world's largest carmaker tries to rebuild its reputation for quality after record recalls, President Akio Toyoda, a racing fan, has said he wants to add more fun to his cars. Under Toyoda, who became president in June 2009, Toyota Motor has taken orders for the Lexus LFA $375,000 supercar, is readying an "affordable" rear-wheel drive coupe and may even add a sporty version of the Prius.

"Cars like the LFA are brand-builders in the overall product portfolio," said Ashvin Chotai, London-based managing director of Intelligence Automotive Asia, an industry consultant. These cars, at the periphery of Toyota's business model, "are less about volume and more about excitement."

The projects fall under a new Sports Vehicle Management Division set up in January, a month before Toyoda flew to Washington, D.C., to face congressional questioning on the company's recalls for problems related to unintended acceleration.

The unit expands a similar group organized by Toyoda in 2007 and aims to "reinforce sports-vehicle product planning," according to a company statement.

The "affordable" sports car, known as the FT-86, is being developed with affiliate Fuji Heavy Industries's Subaru unit. Toyota plans to introduce the model by the end of 2011.

Toyoda touts the role of racing in car development and started participating in a 24-hour endurance race in 2007 in Nurburgring, Germany, where various versions of the LFA were tested.

His fervor for racing is reflected on his business card, where a cartoon image of Morizo, his race-car driver alter ego, flashes a peace sign with one hand and cradles a helmet in the other.

The carmaker has orders for all 500 units of the LFA, according to the company. The car will enter production in December.

"The LFA is technologically brilliant but completely overpriced" at almost triple the price of Porsche SE's 911 Turbo, said Mark Sweeting, a London investment banker in London who has owned numerous sporty European cars.

Toyota's sports cars no longer in production include the Supra, built between 1986 and 2002 and featured in the 2001 racing movie "The Fast and the Furious," the MR-S roadster that ended production in 2007, and the Celica, made between 1970 and 2006. The company's first supercar was the 2000GT, featured in the 1967 James Bond movie, "You Only Live Twice."

"Toyota used to have cool sports cars like the Supra and Corolla Levin," said Kosuke Kakizawa, a sports-car fan in Tokyo who owned a Toyota Cynos coupe in the mid-1990s. "Now, when you think of sports cars, you think of the foreign brands." Kakizawa now owns an Audi TT coupe.

Raffone, the Prius owner, said, "Toyota should really focus on its cutting-edge eco-friendly technology and leave the sports cars to the niche manufacturers."

Last month, Toyota held a test-drive event for its new "G Sports" versions of the Noah and Voxy minivans, which were developed and tuned with the help of race-car drivers and have lowered suspensions, more responsive steering and high-performance brakes.

"These are cars that are sporty without being hard-core sports cars," to be enjoyed by drivers with families, said Tadashi Yamashina, a senior managing director in charge of the company's development of sports cars. Sports models contribute little to sales volume and profit, Intelligence Automotive's Chotai said. Toyota sold 1,300 units of the MR-S in Japan in 2006, the last full year it was offered. That compares with 2.27 million cars sold domestically in the fiscal year ended March 2007.

Japanese rival Honda Motor also cut back on sporty cars over the past decade, axing plans for a revamped NSX supercar and ending production of the S2000 roadster in 2009. Instead, Honda introduced the sporty hybrid CR-Z in February.

Toyota displayed a concept hybrid sports car, the FT-HS, at the 2007 Detroit auto show.

Nissan Motor, Japan's third-largest automaker, came out with a more powerful version of its flagship GT-R sports car in 2007.

"The sporty push is understandable since the whole industry is so fixated on improving vehicle fuel economy, which leaves something to be desired" for enthusiasts, said Koji Endo, an auto analyst at Advanced Research Japan in Tokyo.

More sports models may also raise morale inside the company. "Sports cars keep the engineers motivated," said Edwin Merner, president of Atlantis Investment Research in Tokyo. "They are worth doing on a limited scale."