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Toyota seeks to cut car prices 30% by 2013

Toyota seeks to cut car prices 30% by 2013
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First Published: Fri, Jun 18 2010. 04 04 PM IST
Updated: Fri, Jun 18 2010. 04 04 PM IST
Toyota city, Japan: Toyota Motor Corp is aiming to slash its car prices by 30% by 2013 through a new cost-cutting strategy to better compete against rivals such as Hyundai, a senior executive said.
Toyota, until recently the world’s fastest-growing carmaker, in under intense pressure to become more competitive as Volkswagen, Hyundai Motor and others narrow the sales gap with rapid growth in China, India and other emerging markets.
“Compared with Korean cars, our vehicles are roughly 30% more expensive globally,” Takeshi Shirane, senior managing director in charge of purchasing, told Reuters in an interview on Friday.
“So what we’ve said is, let’s work towards that goal.”
Under the scheme, called RR-CI, Toyota is tasking engineers and purchasing staff to work together to collectively come up with the best way to design and manufacture 165 designated components, setting a unique cost-reduction target for each. Suppliers are also asked to contribute ideas.
The plan, which kicked off late last year, marks a major departure from Toyota’s past practice of setting up project teams for each vehicle model to decide the ideal component design for only that model.
Previously, Shirane said, a model built and sold globally like the Corolla had one blueprint that drew up the same component designs across the world. While that was effective for some components, it wasn’t for others, Shirane said.
Under RR-CI, which stands for “ryohin” (quality) “renka” (low price), and cost innovation, Toyota wants to come up with a design that, for instance, makes better use of cheaper and locally available material, even if it means coming up with several different blueprints for the same part.
“It takes a lot of work and (30%) is a very tough goal,” he said.
“But I’m hoping that by the end of this year we’ll have come up with the best ‘story´ for each of the 165 parts.” The target, is for those efforts to bear fruit from the next round of vehicle revamps, around 2013, he said.
Automakers around the world are all under increasing pressure to slash the cost of producing cars as they seek growth in emerging markets such as India, where small, cheaper cars dominate.
And Toyota -- a laggard in many such markets -- faces formidable competition. Volkswagen, which has a goal of toppling Toyota as the world’s top automaker by 2018, already has a successful car platform and parts-sharing scheme across its many of its group’s brands including Porsche, Audi and Skoda.
Shirane, a 33-year Toyota veteran, also sees a tough fight against the Chinese.
To drive home the urgency of Toyota’s task, Shirane said he sent 150 Toyota engineers and purchasing members to China in November to observe and learn from local parts makers.
“I made sure there were young members in the group,” he said. “We’ve always had this notion that we are No. 1 in cost-cutting. I wanted them to see for themselves that we face tough competition.”
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First Published: Fri, Jun 18 2010. 04 04 PM IST
More Topics: Toyota | Carmaker | Japan | Prices | Volkswagon |