Toyota's biggest problem: Aging lineup

2011-01-10 21:04:00 PST Detroit, , United States — (01-10) 21:04 PST DETROIT, CA (AP) --

It would be easy to think Toyota's biggest problem is its damaged reputation caused by sudden acceleration recalls, millions in government fines and massive lawsuits and settlements. But what's hurting the company most is an aging lineup of boring cars.

Over the past decade, Toyota and its U.S. dealers had it easy. Cutting edge design wasn't required because the cars sold themselves on reputation. Everyone knew Toyotas held their value, were safe and got drivers from point A to point B with little drama. Then came the recalls, which called all of that into question.

Ending the year on a low note, Camry sales fell 10 percent in December from a year earlier. Corolla sales plunged 35 percent. Unless things turn around quickly, Camry is in danger of losing its 10-year crown as the nation's top-selling car this year to the Honda Accord.

Ho hum cars are "probably the worst problem for them," says Jessica Caldwell, director of pricing and industry analysis for Edmunds.com. "They always had their (safety) reputation to fall back on, but now that's not the case."

CEO Akio Toyoda acknowledges that Toyota is at a design crossroads. He has told dealers several times that he's working to improve Toyota's exterior styling, pushing designers to come up with something more exciting. The company is "intent on making Toyota cars better looking," he told reporters Monday during his first-ever visit to the North American International Auto Show in Detroit.

After becoming the world's largest automaker in 2007, Toyota reversed course and resumed giving executives in Japan the final say on design decisions for the U.S. market. Some question whether that change left Toyota at a disadvantage as Hyundai, Ford and General Motors moved quicker to tailor new designs specifically for U.S. car buyers.

Mike Jackson, CEO of Autonation, the country's largest car dealer network, says that in the past, sedans sold based primarily on their quality, reliability and resale values. Automakers believed "the styling should be conservative enough to not put people off," he said. "I don't think that's the future. Now you have to differentiate yourself."