Peter Lyon's column

	Toyota is Japan's richest company. It could lose £100million down the back of the sofa and no one would notice.

Not long ago in these pages, I sang the praises of Toyota as a company boasting world-beating reliability, a strong product line-up with new hybrid engines coming online, an expanding group portfolio that now includes Subaru, and a destiny to become the world's biggest car maker by 2007. And with the new Lexus LS luxury flagship and 2007-model Corolla due to land in showrooms this year, you could be forgiven for thinking that Toyota is an unstoppable juggernaut. But is it?

I think it's high time we took another look at Toyota. Let's step back a moment and focus on the bigger picture. Because some surprising cracks are starting to appear. Even this Goliath of the car world has an Achilles Heel. For starters, back in 1998 when it launched the Prius, Toyota seemed to put all of its future fuel eggs in the hybrid basket. It's common knowledge that Japan's top car maker leads the world in hybrid production. But in Europe, hybrids have not proved themselves against the latest fuel-efficient diesels. And in many parts of Europe and South America, Toyota has not kept up with the huge leap forward in biofuel development.

Just last May, chief executive Katsuaki Watanabe announced that Toyota would be launching ethanol-powered cars in Brazil next spring. But this is a knee-jerk reaction to catch up with the use of such biofuels in Europe, and GM's plan to sell 400,000 ethanol cars in the US next year.

We speak of reliability as if it's exclusive to Toyota. But by June of this year, Toyota had recorded six major recalls, encompassing nine makes and totalling more than half-a-million cars. The problem? As more common platforms and standardised parts are used, a malfunction in one can be catastrophic, as it affects several different models at once. And this has started to happen, a fact reflected in Toyota's result of fourth in a leading US reliability report. The fact Hyundai inched past into position three is, well, a little embarrassing, I should think.

As Toyota moves more production overseas and increases its building capacity worldwide, it finds itself tripping over quality control issues. Supporting that view is company chairman Hiroshi Okuda, who admitted to a recent top management gathering that Toyota is having issues with getting sufficient parts and materials to its far-flung production facilities.

Toyota is Japan's richest company. It could lose £100million down the back of the sofa and no one would notice. In Formula One, Toyota's huge investment is yet another elbow in the side of its pride. It's claimed to spend 25 per cent more on F1 than current champ Renault, yet it still can't win a race.

Ask a Toyota spokesman about these hiccups, and he will acknowledge them, but will also downplay their importance. As he knows from past experience, Toyota can fall behind its rivals on reliability, but given time, it will bounce back to grab the top title. And it will eventually sort out those supply line hurdles. The only real issue that has Toyota worried is its future customer base.

The average Toyota owner is getting older. With a distinct lack of sporty cars and the need to launch a youthful global brand in the same vein as its Scion arm in the US, Toyota not only has the worry of biofuels to concern itself with, but it must also create a line-up that will appeal to all age groups, everywhere.

Peter Lyon is Japan editor of Auto Express and writes for a number of influential titles worldwide