Section 9. Preparations for Mass Production and Mass Sales
Item 5. Toyota's Entry into the United States
Establishment of Toyota Motor Sales, U.S.A. and Crown exports
In August 1957, Managing Director Seishi Kato and two others from Toyota Motor Sales Co., Ltd. traveled to the United States as an advance team for exporting Toyota vehicles to the U.S. and began the work of establishing a sales company. A Crown and a Crown Deluxe were sent from Japan as model vehicles, and they displayed them to dealers and used them for test rides.
A test track with a two kilometer circuit was completed at the Toyota Motor Co., Ltd. Technical Center in September 1956, and the Crown could not very well be sent to the U.S. without performing full-scale high-speed endurance tests. One of the concerns from the beginning was that when the Crown was driven on a highway, the engine suddenly began making loud noises and output dropped. The performance was not adequate for sales in America.
The decision was made to conduct business in the United States despite this performance based on the strong reputation of the Crown in Japan and its success in the previously-mentioned 50,000 kilometer-drive from London to Tokyo (Section 8). It cannot be denied that there were excessive expectations concerning its performance. In addition, business was commenced without investigating issues such as local automotive laws and regulations and automobile market conditions, and as a result, many unexpected difficulties were encountered.
In any case, Toyota Motor Co., Ltd. and Toyota Motor Sales Co., Ltd. reached an agreement and established Toyota Motor Sales, U.S.A., Inc., a California corporation, on October 31, 1957 to establish a foothold for entering the U.S. market. Each company provided one half of the one million dollar capital, and the new company had six directors: President Taizo Ishida and Executive Vice President Fukio Nakagawa of Toyota Motor Co., Ltd. and President Shotaro Kamiya, Managing Director Seishi Kato, Managing Director On Nakae, and Director Sadazo Yamamoto of Toyota Motor Sales Co., Ltd. President Kamiya of Toyota Motor Sales served as president of Toyota Motor Sales, U.S.A. and (First name) Kobayashi, Deputy General Manager of the Mineral Oil Department of Toyota Motor Sales, served as its vice president. The head office was located at 6032 Hollywood Boulevard.
Operations in the United States started with investigating various procedures ranging from automobile imports to retail sales and obtaining the necessary forms. From these investigations, it was learned that it was necessary to establish separate import, wholesale, and retail companies in order to maintain fair pricing between import and wholesale as well as between wholesale and retail. Accordingly, wholesale operations were separated from Toyota Motor Sales, U.S.A. and Toyota Motor Distributor was established in February 1958. At the same time, a dealer named Hollywood Toyota was established with the aim of learning about retail operations.
It was also necessary to obtain automobile certification pursuant to the automobile-related laws of each state. In order to sell motor vehicles in California, it was necessary to obtain certification from the California Highway Patrol. In California, headlight brightness was set based on sealed beam lamps (which were common in America) but the Crown was not equipped with sealed beam lamps and did not meet the standard. As a result, the Crown was imported without headlights, and lamps manufactured by General Electric in the United States were installed.
Following these preparations, 30 Crown Deluxe vehicles without headlights were loaded onto a ship in June 1958, and exports to the United States began. The performance and quality issues that had been a source of concern materialized, and problems including a lack of output while traveling at high speeds, inadequate high-speed stability, extreme noise and vibration, abnormal vibration, and breakage of parts due to deformation occurred. To address these problems, the Model RS22L series and the Model RS32L series with higher output and improved high-speed cruising performance were introduced in July 1960.