ember duopoly: Borst will retire as Toyota finance chief

George Borst's move in 1997 to Toyota Motor Credit Corp. puzzled some Toyota insiders because of his lack of experience within the finance arm.

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LOS ANGELES ? George Borst, who led Lexus through the endaka currency exchange crisis of the mid-1990s and who has been CEO of Toyota Financial Services for the past 13 years, announced his retirement from Toyota today.

Borst will stay with the U.S. credit and insurance arm through the end of September, he told a meeting of top Toyota and Lexus dealers. He will turn 65 on Sept. 2.

His replacement will be Mike Groff, 58, the seventh employee hired by Toyota Motor Credit Corp. when the captive finance company was formed in 1983. Groff has been head of Toyota Financial Services' sales and marketing for the past five years.

Borst presided over massive growth in Toyota's finance arm ? from about $21 billion in assets in 1997 to $91 billion today, with its operating income jumping sixfold in that period, to $1.8 billion. Toyota's share of its dealers' finance business has soared from 37 percent in 1997 to 64 percent today.

In an interview, Borst said Groff is an excellent choice as his successor.

"Mike has worked in the branches and regions, in operations and strategic planning," Borst said. "His five years in sales and marketing have been the toughest five years ever, and we've had terrific results in that time."

Hired by McCurry

Borst was hired in 1985 by legendary Toyota Motor Sales U.S.A. executive Bob McCurry to oversee the marketing department, a position that evolved into running Toyota's budding strategic planning department in 1991.

But his biggest challenge may have been as general manager of Lexus Division, a job he assumed in 1993. During his tenure, the dollar collapsed against the yen, making the cost of Japan-built vehicles sold in America much more expensive. The yen went from 115 to 80 to the dollar by 1995, and Lexus' launch momentum was derailed.

"I am most proud of my time at Lexus," Borst said in an interview. "When we started to struggle, we could have had bargain-basement sales and eliminated all those customer handling touches. This was our first test of who we were. And in 1995, even as our sales volume had dropped, we still swept the J.D. Power awards."

Borst's move in 1997 to Toyota Motor Credit Corp. puzzled some Toyota insiders because of his lack of experience within the finance arm. At the time, even Borst admitted he was a bit at sea. But his background in strategic planning helped meld an organization that has become a financial powerhouse.

In 2000, Toyota Motor Corp.'s 16 separate finance arms worldwide were absorbed by a new global finance unit called Toyota Financial Services Corp. Borst was named CEO of Toyota Financial Services U.S.A.

One of his first moves was to create a collaborative management committee to analyze strategies to help build the business. He also changed the unit's field structure.

In 2001, Toyota decided that its 36 finance branch offices should handle only dealer business and stop handling customer interaction. Instead, three call centers handled all customer service. About 1,000 people were affected, and some branch offices were closed. But with more than a year's notice, Toyota Financial suffered little loss of service in the move.

Award winner

The increased efficiencies allowed the unit's volumes to nearly double in five years ? growth that slowed only when the recession hit. Again, Borst made a tough decision, refusing to let Toyota Financial back out of leasing when the rest of the industry panicked. Toyota stood by its residual values, and dealers and retail customers stayed loyal to the brand.

As a result, Toyota has 345,000 off-lease customers returning to the fold within the next 18 months ? a significant opportunity for loyalty retention, Borst said.

"When you think of how competitive this market is, that's a significant advantage," he said. "Were giving dealers 18,000 leads a month from this."

Toyota Financial Services is now the No. 2 issuer of commercial paper in the world, behind General Electric. And the unit's in-house treasury department has won all four of the financial services industry's coveted awards for performance, stability, speed-to-market and risk management. No company, automotive or otherwise, has ever done that, Toyota said.

Those were key reasons why Borst was named an Automotive News All-Star in 2012.

Borst said he was proud that Toyota's finance arm ranked atop seven categories in the recent National Automobile Dealers Association survey.

"Toyota dealers can only get their cars from Toyota," he said. "But finance is a commodity product. It's a relationship business."

You can reach Mark Rechtin at mrechtin@crain.com. -- Follow Mark on