Toyota keen on prioritising efficiency, not volume

By: MIKE OCHONMA

…Not perturbed about global top-spot

In today’s corporate world, many organisations strive to maintain a fair balance between where they are and where they are headed to in terms of returns on investment and volume so as not to compromise operational processes and efficiency to maintain their corporate bottom line and surpass the expectations of their customers and individual and institutional investors.

Back in 2008, Toyota Motor Company feared turning into the next General Motors when it passed the U.S. automaker to become the world’s largest, by annual volume.

This time around, no doubt Akio Toyoda; the CEO of Toyota and his managers will be more relieved now that the Volkswagen group has passed Toyota to occupy the top spot a few years later. The Japanese giant is not interested in wholly owning more brands. Rather, it is keen on operationalizing processes and maximising efficiency to be among the global top three.

Currently, the VW Group now is leading the march from internal-combustion engines to electric vehicles but being number one according to industry followers doing it any favours.

Today, electric and automated vehicle technology or self-driving electric city cars are cutting into every major automaker’s bottom line, let alone one that has suffered more than $30 billion in fines so far in the U.S. and European Union as a result of the diesel cheating scandal.

GM and Ford Motor Company are paying for EV/AV development with fat truck and SUV profits. On the other hand, Toyota, known for efficiently making mainstream cars and trucks that last forever has long been a profit-making machine, churning out high-volume models on its own while it teams up with smaller manufacturers for niche segments.

As a forward thinking automaker that prioritises efficiency Toyota is seen as a sort of Japanese auto industry godfather, stepping in when the smaller companies are in trouble, such as when GM sold off its minority interest in Subaru and Isuzu after the American automaker’s 2009 bankruptcy.

It would be recalled that not long ago, the leading Japanese automaker took a stake in Fuji Heavy Industries (now officially called Subaru) and they jointly developed the Toyota 86 Subaru BRZ.

The Subaru Ascent was supposed to be built on the Highlander platform, which would have meant an inline-four and maybe a V-6, instead of its turbocharged flat-four engine, but at the end Subaru developed its big SUV itself.

Japan’s government remains protective of its singular auto industry. Global industry follwers believe that, if its locally dominant automaker, Toyota, can smoothen out market fluctuations by rationalizing assembly-plant output and maintaining a stable supply chain with these alliances, Japan might remain the only developed economy that can survive the uncertainty of the 2020s auto industry.

It is not that, the automaker has not heard its fair share of lows from time to time. For some time, Toyota has come under criticism for choosing to partner with BMW towards the development of the new Z4-based Supra sports car, but it has long favoured sharing manufacturing and development resources. Yamaha built the 1967-70 2000GT sports cars for Toyota, and the two have long collaborated on engine development and manufacturing, motorsports, and marine engines.

Lately, Toyota struck a marriage of convenience deal with Suzuki in the area of cross-border funding in the vital areas that both parties are convinced will further their business interest.

Under the capital alliance announced recently, Toyota will purchase $908 million in Suzuki shares, or a 4.8 percent stake, and Suzuki will purchase $455 million in Toyota shares, or about 0.2 percent.