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Toyota Targets $1B Cut In Compact-Car Production Costs by 2012

The Nikkei reports that Toyota Motor Corp. plans to slash production costs by ¥100 billion (US$1 billion) by sharing common parts and platforms for Japan-made cars in the 1- to 1.8-liter class. These include the Vitz, Raum, Ractis and Corolla.

The leading automaker has long relied heavily on large and luxury vehicles to drive its profit growth, but demand for small and eco-friendly cars is set to expand significantly as a result of the global recession. The company will thus rework its profit structure substantially so that it can earn high profits even on small models. This would also enable the company to aggressively cultivate demand in emerging markets.

Toyota plunged into a 461 billion yen [US$4.7 billion] group operating loss for fiscal 2008 as its sales of large and luxury vehicles tumbled. The loss is projected to widen to 850 billion yen [US$8.6 billion] this fiscal year.

Toyota, which has already been reducing production costs reportedly intends to double the current reductions in production costs of ¥300-400 billion per year to ¥800 billion this year. The ¥100 billion reduction is on top of that.

To enable use of the same platform, Toyota reportedly is considering scaling down the size of the Corolla’s body to that of the Vitz. The company also reportedly will phase in the cost-cutting program at its US and European plants.

Comments

ejj

Great strategy on behalf of Toyota...might as well restructure now while everyone else is...continue overbuilding the Prius & rely on the granolas to keep paying top dollar for it...maximize efficiencies on production of smaller cars - outsource labor to China as much as possible, assemble in Japan & slap Toyota badges on the cars then ship them to the US.

kelly

"TOYOTA CITY, Japan, June 5 (Reuters) - Toyota Motor Corp (7203.T) has brought back overtime at two domestic factories to ramp up production of its hot-selling Prius, ..The world's biggest automaker said on Friday it was building about 2,300 units of the Prius hatchback per day on four assembly lines at the Tsutsumi plant and a factory belonging to affiliate Toyota Auto Body Co (7221.T)."
http://evworld.com/news.cfm?newsid=21179 granolas..

Engineer-Poet

This is exactly the sort of initiative that killed the Detroit automakers... when they failed to undertake it beginning in the 1970's.

ToppaTom


“The leading automaker [Toyota] has long relied heavily on large and luxury vehicles to drive its profit growth”

This is exactly why the Detroit automakers should continue to make large vehicles, atleast as long as they survive. 47% of the US market is light duty trucks. .
”The company will thus rework its profit structure substantially so that it can earn high profits even on small models.”

The Japanese auto makers had priced their small cars to sell, with small profits, and it has long been futile for Detroit to compete.

Now that Detroit competition is gone, Japan can raise small car pricesAnd take over truck sales also.

ejj

The F-150, Dodge Ram, Chevy Silverado & GMC Sierra will be very popular for the forseeable future (lots of truck per dollar spent) - but sales of these alone can't support the Big 3...they will be in the small car game big time soon. They are going to be mass producing more electric cars than money the Obama Administration is printing. Question is when this happens, will Toyota & Honda be ready with CHEAP hybrids for the masses too? It looks like Nissan is going to be ready.

Engineer-Poet

I'm not so sure about that popularity.  Unleaded regular is over $3/gallon again in my neck of the woods, and the affordability of driving one of those monsters is headed downward even for people who still have jobs.

ToppaTom

Light duty trucks (PUs and SUVs) remained popular (though less so - market share is dropping below 47%) when gas exceeded $4/gal and obviously will sell well for the foreseeable future.

With the new administration in control, the truck designs of the US 3 may not be kept current, truck profit will decrease, and Tundra and Titan share will expand.

As they move into the small car game they will see Japan make most of the sales.
But some sales will be left over.
Left over for the auto makers in China, S. Korea and India.

Engineer-Poet
Light duty trucks (PUs and SUVs) remained popular (though less so - market share is dropping below 47%) when gas exceeded $4/gal
That was during a period of very heavy promotions (because production was essentially fixed and dealers were paid to move whatever was coming off the lines).  I doubt we'll have that situation in the future.

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