THE CAR is ‘the machine that changed the world’. It has played a huge part in global social, economic and industrial development. Consumers increasingly want the mobility, convenience and status that go with car ownership, and one estimate is that today’s world car population of 740 million will rise to 1.2 billion by 2020.

But vehicles consume irreplaceable fossil fuels and now account for 20 per cent of European CO2 combustion emissions, according to the European Environmental Agency.

Although 75 per cent of end-of-life vehicles by weight is currently recycled, an estimated 2 million tonnes of scrap residues a year go into landfill waste tips in Europe alone. Car manufacturing plants generate waste and harmful emissions of their own.

So is a sustainable motor industry an oxymoron? Maybe, but the experience of Japan’s Toyota offers some cause for optimism. Although true sustainability remains a long way off, Toyota shows how enlightened corporate values combined with long-term regulation and competition can drive industrial production in an environmentally positive direction.

Although its past ranges of cars have lacked charisma, Toyota packs business oomph. With a 10.7 per cent market share, last year the Japanese group passed Ford to become the second biggest vehicle manufacturer in the world. Few doubt that it will hit its aim of a 15 per cent global share in the next decade.

Toyota’s reputation and sales reflect this performance. Last year it was the Financial Times’s third most highly respected company after GE and Microsoft, and by some distance the highest-ranked car company. With a market capitalisation of £50bn Toyota is worth more than GM, Ford and Daimler-Chrysler put together.

So what Toyota does matters. Take the launch of its second-generation Prius, the first hybrid petrol-electric powered car to go into mass production. The latest Prius, the North American Car of the Year and Best Engineered Car of 2004, is driven by electricity at low speed, when petrol is least efficient, and by a conventional motor on the open road. By using the strengths of both, the combined technology improves fuel consumption figures and dramatically cuts low-speed emissions. As a tribute to its cleanness, the Prius is exempt from the London congestion charge.

Hybrid cars, says Toyota UK marketing director Paul Philpott, are only the bridge to fuel cells, possibly the cars of the future. The first fuel-cell vehicles, whose only by-product is water vapour, are already being tested in the US and Japan. Mass production is still a decade or so off, dependent on the creation of a fuel infrastructure and how fast the tech nology can be made affordable. Meanwhile, the hybrid is an important environmental step forward. It has the advantage of dovetailing with the existing infrastructure, and it is acceptable to consumers because there is little performance downside – in fact, its next manifestation will be in a luxury high-performance Lexus four-wheel-drive. ‘Prius makes environmental motoring desirable,’ says Philpott – as underlined by the car’s engineering accolades and rapid take-up by consumers. More than half the UK’s 2004 allocation of 1,600 have already been sold, and the global total for the year is on target for 130,000.

This is only a small proportion of today’s output of 6 million Toyotas. But the hybrid will steadily be extended to other Toyota models as the technology improves and economies of scale kick in, changing the competitive landscape. No manufacturer can now afford to ignore the technology. Ford has just licensed Toyota’s technology, and General Motors, owner of the UK Vauxhall brand, is due to produce a range of hybrid SUVs (sports-utility vehicles) and pick-up trucks.

While the Prius is the headline grabber, however, Toyota can legitimately claim that its environmental credentials go deeper than greener engines. Indeed, can be argued that the platform for its success, the Toyota Production System (TPS), is, as the exemplar of lean manufacturing, a major contribution to environmental welfare in its own right.

The TPS, constructed on the principle that it is better and cheaper to build in quality to cars from the start than inspect it in at the end – the traditional Western view – has been steadily honed over nearly 70 years to minimise every aspect of waste: time, space, energy, raw materials, movement, inspection. This ‘pursuit of the zeros’ has taken Toyota so far ahead of its rivals that it reputedly takes less time to build a Lexus than to correct the faults in an expensive German car coming off the assembly line. If every manufacturer were as efficient, the Kyoto anti-pollution targets would be within reach, or could be set much higher.

The power of this kind of continuous improvement is that there is always more to go for. Last year ,Toyota’s UK plants at Burnaston in Derbyshire and Deeside in North Wales sent almost nothing to landfill tips, compared with 8.5 kilos per car in 2001. Over Europe as a whole, the group cut energy use by 19 per cent and used 6 per cent less water while increasing production.

Toyota’s technological innovations around cleaner engine technology and safety are grounded in, and supported by, this frugal manufacturing philosophy. Both are enshrined in the company’s Earth Charter, first developed in 1992, and its full life-cycle Environmental Management System.

Both are essential to fulfil the group’s ultimate aim of building a car that emits zero emissions over the whole of its life. Ambitious but, as Toyota president Fujo Cho says: ‘The expansion of automobile use will have a significant impact on the environment. In other words, there is no future for the automotive industry without the promotion of environmental technology. Toyota is convinced that only companies that succeed in this area will be acceptable to society.’

The virtuous circle is just that.

CORPORATE SOCIAL RESPONSIBILITY, Special Report, The Observer, 21 March 2004