For the Japanese car company Toyota, 2005 has been a bumper year. The company's global fortunes are at such a high level that the chairman, Hiroshi Okuda, suggested back in April that it might raise its prices to give “some breathing space” to its bloated US rivals, Ford and General Motors.

The car industry isn't quite the economic driver that it was a few decades ago, but cars still account for a huge portion of consumer spending. And despite the industry's traditional conservatism, it has become a hotbed of innovation in electronics, materials, environmental engineering and other spheres.

When oil prices went through the roof last year, it was Toyota and Honda — not General Motors or Ford — who were ready at the starting gate with ‘hybrid’ vehicles.

Basic scientific research usually operates a few steps away from technological innovation in the motor industry. But Toyota is doing some interesting things at its central research and development laboratory near Nagoya (see page 1026). As in other sectors, the period of transition from scientific knowledge to industrial application is shrinking.

Toyota's success has always been more about industrial efficiency than technical innovation. But its technology has progressed steadily over the past ten years, while the competition in the United States has been resting on its laurels. Now that the boom in sales of large, conservatively designed sport utility vehicles seems to be over, US car-makers are experiencing a rude awakening.

As the prospects for the Detroit industry darkened earlier this year, credit agencies humiliated Ford and General Motors by reducing the ratings of some bonds that the two companies have issued to ‘junk’ status. That apparently prompted Okuda's intervention: the Toyota chairman felt that a fresh crisis in the US car industry could lead to a surge in protectionist sentiment that might damage Toyota. Then, a few weeks ago, General Motors announced that it is planning to shed 25,000 people, almost a quarter of its factory workforce in North America.

Perhaps the starkest difference in approach between Toyota and its US rivals has been the way they tackled environmental innovation. Detroit car executives have acted like parodies of themselves, accepting generous subsidies from the federal government under then President Clinton's much-trumpeted Partnership for a New Generation of Vehicles programme and asking for less regulation in return — as though their participation was doing the taxpayer a favour. That initiative came and went, but when oil prices flew through the roof last year it was the Japanese manufacturers Toyota and Honda — not General Motors or Ford — who were ready at the starting gate with their ultra-economic ‘hybrid’ vehicles.

Toyota's approach to science, technology and innovation isn't exactly off-the-wall. It can't afford to be: the company knows that the product has to work when it is delivered. And Toyota's scientists and engineers don't match the flamboyant modern paradigm of innovation, as inspired by California's Silicon Valley. They are, instead, meticulous, intensely loyal to the corporation, collaborative in outlook, and keen to keep a low profile. The outcome is impressive — and demonstrates that successful innovation can take many different forms.