Toyota anticipates to save $2.7 billion through compatibility
Posted by: in Companies Competitive StrategyFiled under: Good news, Competitive strategy, Toyota Motor Corp. (TM)
Toyota Motor (NYSE: TM) stated this week that it plans to speed up its cost-cutting efforts globally in 2008, which should save it up to $2.7 billion annually. The world’s largest automaker by unit volume is being squeezed with higher commodity costs and product development costs, just like domestic automakers in the U.S. Same song, different verse.
Toyota President and CEO Katsuaki Watanabe stated, “I would expect to exceed what we’ve done under the previous plan,” alluding to previous cost-cutting efforts that have been made and measured on a per-vehicle basis in current times. Watanabe said that cost cuts should “grow every year” as sales rise. Sounds like a one-two punch to me. Is it feasible for Toyota, which has been stung by some bad safety PR recently?
Toyota’s Value Innovation (VI) cost-savings plan has been in the works since 2005, and meant to group the thousands of components in each Toyota vehicle into a series of modules and systems — in effect, simplifying design and saving tremendous costs when scaled globally across all platforms. Watanabe added, “I believe the strategy is basically proceeding as planned.” The competition is, of course, not standing still when it comes to cost cuts, but those are mostly in labor and production capacity.
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