Toyota to cut auto parts costs by 30 percent

[tenderloin]

Toyota to cut auto parts costs by 30 percent:

TOKYO (Reuters) - Toyota Motor Corp (7203.T) plans to cut auto parts procurement costs by around 30 percent over three years to help it regain profitability, media said on Tuesday.

Toyota has asked its suppliers to cut prices of some parts by 30-40 percent for cars that will hit the market by 2013, the Asahi daily said. The Nikkei business daily also said Toyota plans to switch to less expensive materials and parts.

Toyota spokesman Takanori Yokoi said the automaker had made "various suggestions including cost reductions" to suppliers on Monday, but he declined to disclose details.

Toyota, which has forecast its second straight annual operating loss, plans to overhaul its car designs to help cut costs, the two newspapers said.

Toyota's request for a 30 percent reduction in costs -- the biggest in 10 years -- comes as the automaker is trying to sharpen its price competitiveness in emerging markets, the Asahi said.

Growing concern over the yen's continued strength is also behind the move, the Asahi said.

Toyota's shares gained 1.6 percent to 3,780 yen while the broader Nikkei 225 index .N225 advanced 1 percent.

 

[asiancivicmaniac]

I hope they know what they are doing, or the next new car anyone in my family gets definitely won't be a Yota.

 

[Ursae_Majoris]

My Toyota Tacoma was already as cheap at it could be. Interior scratched if you looked at it a wrong way, paint was thin and chipped easily, seat stained very easily, until I put Wet Okole seat covers on.

I do not know what cheaper interior materials Toyota can use. Paper and card board????

My low-priced Kia Spectra feels luxurious, compared to Taco.

 

[heypete]

Hmm. My 2006 Camry has excellent parts and seems to be holding up well, and my fiancee's 2010 RAV4 seems to have similarly high-quality parts. Fit-and-finish is good, though the vehicle is new, so who knows how it'll hold up over the years? Hopefully well.

Cutting parts costs a bit is not a bad idea, but 30-40 percent? That seems a bit much to do all at once.

 

[Ursae_Majoris]

Different plants, different vehicles, I guess. My 05 Taco was built in NUMMI.
A shock blew in the first year, tailgate collapsed and folded in half (replaced under warranty after a fight and after the TSB covering weak tailgates came out), rattling air intake was replaced under warranty, truck rode on the bump-stops with 300# in the bed, not even close to the rated 1100# (springs were replaced after the TSB came out and I waited 6 months for the springs), ABS brakes that did not slow me down.
Needless to say, I was not impressed with my first and last Toyota.

 

[JHZR2]

That is a lot of reduction, achievable only by offshoring to China AND cutting quality.

Not a smart move, though they'll keep advertising to the brainwashed that buying a Toyota is sooooooooo smart...

 

[pbm]

Toyota seems to be following the business model that drove GM to bankruptcy.

 

[benjamming]

I agree with the previous two posters, JHZR2 & pbm, that cutting prices that much will affect quality, & I believe drastically. Time to jump off this sinking ship. So, who is the Coast Guard Cutter in this arena?

 

[Bluestream]

I doubt the parts suppliers even make 30% margin now...

 

[mrsilv04]

Originally Posted By: pbm
Toyota seems to be following the business model that drove GM to bankruptcy.


I agree. About the time that they were working on their full size pickup, and getting into NASCAR, it seemed to me that they were trying to be "THE" car company to full the needs of everyone.... like GM.

As the saying always goes..... be careful what you wish for...

 

[Bill in Utah]

The paint on my 2005 is really the only thing on my Toyota that I'm not happy with.

If I drive by a sand pit the paint falls off. I've got at LEAST 1000 rock chips ALL OVER the car. Not just the hood, roof and fenders but on the sides and trunk lid.

Weakest paint I've even seen.

Thank the EPA for the "improved" paint..

The rest of the car I'm impressed with and just passing 157k it still feels like its brand new.

But it will get a repaint in a few years.

Bill

 

[SrDriver]

Sad this is happening. Seems while Toyota is cutting back. KIA and Hyundai are headed in the other direction not only with parts but quality.

I may be wrong and often am but I think many people are willing to pay some extra bucks for quality?

 

[Bill in Utah]

Originally Posted By: SrDriver
Sad this is happening. Seems while Toyota is cutting back. KIA and Hyundai are headed in the other direction not only with parts but quality.

I may be wrong and often am but I think many people are willing to pay some extra bucks for quality?


No, I think people expect certain things to be standard on vehicles.

We have quite a few Dodge and Ford vehicles at work and their paint is just as poor as my Toyota's. Most of our CrownVics have had their hoods and trunks repainted a few times. While they look nice with the clearcoats and such, the paint just does not last like older thick paint systems. Maybe if the paint did not chip so easy in the long run the clearcoats would look better longer, but getting the paint to stay put is a problem due to the EPA and their "protecting" us.

KIA is Hyundai so they are the same BTW.

Take care, bill

 

[pbm]

Originally Posted By: benjamming
I agree with the previous two posters, JHZR2 & pbm, that cutting prices that much will affect quality, & I believe drastically. Time to jump off this sinking ship. So, who is the Coast Guard Cutter in this arena?


I would say Hyundai and Ford are the two companies with the best plan (and products) right now.

 

[Cutehumor]

I think this is a smart move when economy cars are approaching almost $20k, as long as the customer sees the price reduction. In this recession, it's getting to the point where common folks can't buy new cars anymore, even lowly economy cars.

 

[KrisZ]

Originally Posted By: Cutehumor
I think this is a smart move when economy cars are approaching almost $20k, as long as the customer sees the price reduction. In this recession, it's getting to the point where common folks can't buy new cars anymore, even lowly economy cars.


You got it all wrong, the 30% reduction is for Toyota's bottom line, the customer will not see a cent of those savings and the prices might even go higher, as we expect more and more electronic toys with our cars, the EPA is pushing for lower emissions and higher fuel economy, I don't see how cars can drop in price, but they will definitely become cheaper made.

 

[fdcg27]

Sounds like a rough ride ahead for those employed by Toyota's suppliers.
A company cannot long sell output for less than variable cost, and after years of continuous improvement, there can't be anything close to 30% to wring out.
Therefore, the suppliers will be squeezed without mercy, parts quality must fall, and China should pick up some supplier manufacturing.
Might also be a bad time for Toyota buyers, and ultimately, Toyota.
It's easy to cheapen a product, and very hard to regain the reputation you lose as a result.

 

[unDummy]

There can be a drop in price if they get rid of all the useless options and return to less bloated vehicles.

Also, there is plenty of waste in manufacturing. Forcing cost reduction requires some engineering, planning, and thinking. Doesn't always mean quality suffers or off-shoring to commieland.

When you have growth and sales, you don't always 'build' with the most efficiency. Now that volume has decreased, they can look back over their shoulders and cut all the waste.

 

[Steve S]

I went to the Toyota dealer to buy parts for a Brake job and when the parts guy gave me the paperwork to pay there was only the list price on the paperwork. I asked why no discount and he said we do not do that so he kept the parts and I went elsewhere .

 

[Steve S]

Toyota has cut their quality at least 30% over the years.