5.1. The Underdog Even at Home

In the 1930s, Toyota was the underdog in its own, domestic automobile market, which was dominated by Ford Motor Company, General Motors Corporation, and other foreign automakers. Japanese consumers were not just curious about foreign-made automobiles, they were buying them up at a furious pace; Ford and Chevrolet models sporting 3,000cc engines topped the list.

It was against this backdrop that Toyoda Automatic Loom Works began preparing to enter the Japanese automobile market. Kiichiro Toyoda, back from a tour of automobile plants in the United States and Europe, had set aside a corner of the loom plant and started developing a small gasoline engine in March 1930. But after several years of trial and error, he decided to make a car with a big engine. "I'm thinking of making a popular car," he said.[] To Kiichiro, a popular car was the latest, best-selling 3,000cc Ford or Chevrolet. It was an unexpected choice considering the average income level in Japan and the numerous narrow roads that littered the landscape. Rival Japanese automakers Kawasaki, Mitsubishi, Nissan, and Nippon Sharyo had contemplated entering the small passenger-car market with a 1,000cc engine, but none had dared to challenge the imports head-on. History would prove Kiichiro's choice was the right one.

Toyoda Automatic Loom Works announced its first passenger car, the A1 prototype, in May 1935, and started commercial production of the model AA in September 1936. To do so, it had ...

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