Toyota: They never look for a silver bullet
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Toyota: They never look for a silver bullet
Well, that's the secret to their success... a very conservative approach...
Toyota, GM locked in fight for worldwide supremacy
By Christine Tierney and Ed Garsten The Detroit News
"Toyota's going to be No. 1. And whether they do it under the radar or by announcing it, it's going to happen," said Maryann Keller, a longtime automotive consultant and analyst.
Toyota already has overtaken Ford Motor Co. to become the world's second-largest automaker. By 2006, it is shooting to sell 8.5 million cars and trucks worldwide, edging close to GM, ranked No. 1 since 1931. If Toyota surpasses GM, that would have a profound psychological impact on the U.S. industry, one of the last manufacturing sectors where Americans still lead. It would also undermine GM's ability to dominate the industry and buffet smaller players such as DaimlerChrysler AG's Chrysler Group with its price wars.
As the two auto giants compete in every segment and every region, GM faces a dynamic challenger in Toyota that is not only similar in scale but also draws strength from its superior profitability.
At the North American International Auto Show last month, Toyota board member Yoshimi Inaba downplayed the automaker's ambitions.
"Every manufacturer, every corporation needs some growth," he said.
At the same show, GM Chairman and CEO Rick Wagoner sounded defensive. "We've been ahead for 73 years in a row, and the betting odds are we'll be ahead for the next 73 years," he said.
But Toyota has the upper hand as GM struggles through its toughest stretch since a near-bankruptcy in the early 1990s.
GM's unresolved problems -- a bloated staff and too many brands -- are now exacerbated by unforeseen factors. Soaring health care expenses, rising to $5.6 billion this year, have eclipsed its hard-won gains in quality and cost control.
Despite GM's assertion that its prospects will brighten in 2006 with the rollout of new large pickups and sport utility vehicles, Wall Street is worried. Debt-rating agency Standard & Poor's is reviewing a possible downgrade of GM to junk-bond status.
With its Triple-A rating and $36 billion cash hoard, Toyota seems unstoppable. It holds 44 percent of the impenetrable Japanese market. In the United States -- the key battleground -- it has doubled sales to 2.1 million vehicles in 10 years.
But the company's success poses new challenges. Toyota executives are under enormous strain to attain their sales goals without compromising the vaunted quality of the vehicles.
Toyota is also keenly aware of hungry rivals in South Korea -- and newcomers in China -- that are charging from behind with good cars built at rock-bottom costs. A reinvigorated Nissan Motor Co. is growing faster than Toyota in North America and has overtaken Honda Motor Co. to become Japan's No. 2 carmaker. Nor do Toyota's bosses underestimate Detroit's will to come roaring back.
...
"The idea of the regional Big Three is dead -- the issue now is who will be the Global Big Three," said David Cole, chairman of the Center for Automotive Research in Ann Arbor. "GM and Toyota will be two of them. I'm not sure who the third will be."
Stretch marks
With Toyota ramping up production rapidly in North America, the automaker is relying more on U.S. managers to steer startups. Its Princeton, Ind., factory is the "mother plant" for a truck plant under construction in San Antonio, Texas.
For more than 40 years, the Toyota Production System was taught by practiced experts who supervised their pupils. Stressing kaizen, or continuous improvement, the system encourages everyone, from top managers to line workers, to seek ways to improve operations and eliminate waste.
"The Toyota culture has been a great source of strength, with everyone working off a common playbook," said Christopher Richter, auto analyst for Merrill Lynch in Tokyo. "Now you've got a lot of people coming into the company at the same time, and they have to try to keep that culture from getting too diluted."
Toyota's top bosses may be setting ambitious goals to sustain the momentum that brought the company to its current heights, he said. "You're one of the biggest automakers, you're the most profitable automaker, and you want to prevent a culture of complacency from settling in."
Rivals are redoubling efforts to instill quality in their manufacturing process -- and GM has achieved the biggest strides among the U.S. automakers.
In U.S. quality rankings, Toyota Motor still leads the industry, and its premium Lexus brand perennially wins top honors. But Toyota-brand vehicles slipped behind Cadillac and Buick models in the last J.D. Power and Associates survey of vehicle quality in the first 90 days of ownership. Because of the Toyota brand's strength, its vehicles retain value better than Cadillac or Buick cars, says Raj Sundaram of Automotive Lease Guide. But perceptions tend to catch up with reality.
Senior Toyota officials recognize the danger. "A lot of the things we discuss among high-level executives have to do with quality," Inaba said. "How do you maintain quality during this period of high growth and beyond? This is something we're always discussing."
...
To instill its standards, Toyota recently opened a Global Production Institute in Toyota City, Japan, where overseas workers are trained by expert Japanese operators on assembly techniques. Rising managers are steeped in the company culture at the Toyota Institute, whose curriculum was developed with the help of the Wharton School.
As part of the "continuous improvement" mantra, Toyota has expanded early-detection systems to nip problems in the bud. It set up a squad of two dozen Japanese troubleshooters in Torrance, Calif., two years ago. Instead of waiting for dealers' reports of problems to pile up, the specialists now check on rare and minor glitches.
"Problems get fixed faster," said Don Esmond, head of U.S. sales for the Toyota brand. "Before, by the time they were explained to Japan and they got back to us, there was a lag.
"Maybe we're a little paranoid, but there's nothing wrong with that."
If not paranoid, Toyota certainly is wary. It shies away from mergers and acquisitions, although it retains a keiretsu, a web of associated companies and suppliers, such as Denso Corp. and Aisin Seiki Co. Ltd.
Steady as she goes
In his autobiography "Shift," Nissan CEO Carlos Ghosn describes Toyota as "imperious and sure of itself."
Yet the company is also deeply provincial and cautious. Toyota lets others blaze trails and tracks their progress from its headquarters in central Japan's Aichi prefecture. It established production operations in the United States after Honda. It lags Nissan in its bid to challenge Detroit's automakers in the lucrative full-size pickup segment. Skittish about the Chinese market, Toyota missed out on a recent sales boom.
Despite its prudent approach, Toyota has its share of slip-ups. Most recently, its Echo compact tanked in the U.S. market. But with its plentiful resources, Toyota keeps trying. It will pull the Echo from the lineup and replace it with two small cars.
The automaker can afford costly forays into new technologies. It scored big with its Prius gas-electric car, with orders far outpacing production. While it's unclear whether its hybrid program makes money -- rivals say it doesn't -- the clean cars have earned Toyota high marks for good citizenship. This year, it will launch two SUVs equipped with its fourth-generation hybrid technology.
Under pressure to follow Toyota's lead, GM and DaimlerChrysler teamed up in December to develop hybrid powertrains.
"Toyota is using its deep pockets," said GM Chief Financial Officer John Devine. "They have more (money) than any of us, so they can afford to lose a lot of money on the Prius."
But Toyota's biggest strength lies in its unwavering focus on its main objectives: making better cars and lowering costs.
While GM spent billions snapping up new brands, wasting $2.4 billion on an ill-advised investment in Fiat Auto SpA, "Toyota stuck to doing what it did best," Keller said. "They make a car, and then they make the next one better and see where the customer is taking them. They never look for a silver bullet."
"We spend $4 billion, if not more, each year than the No. 2 global auto manufacturer" on health care, said Wagoner, referring to Toyota.
That money could be used to build new plants, develop new technologies or reward shareholders, he says. "Over time that has an impact."
While GM, Ford and Chrysler benchmark the Japanese, Toyota is keeping close watch on lower-cost automakers in Asia. "We conduct research on our Korean competitors, and that is reflected in our considerations," says Toyota President Fujio Cho. "They have improved quality substantially. They produce vehicles at very low cost, and we consider them formidable competitors."
To lower its costs, Toyota has developed a basic platform, or chassis, for five vehicles -- three pickups, a sport utility and a minivan -- that will be built in low-cost plants in south Asia, South Africa and Latin America. Called the Innovative International Multi-purpose Vehicle project, it is expected to generate big savings by sharing components across 500,000 vehicles a year.
"From the U.S. perspective, Toyota looks like it's growing rapidly, but it has been growing a lot faster in the developing world," Richter says. "They want to grow rapidly in these markets, and they want to do it in a profitable way."
A long, hard winter
At the Detroit car show, Wagoner was braced for reporters' questions about Toyota's ascent.
"Look at China -- can we beat Toyota? Absolutely," he said.
...
http://detnews.com/2005/specialrepor.../A01-87977.htm
By Christine Tierney and Ed Garsten The Detroit News
"Toyota's going to be No. 1. And whether they do it under the radar or by announcing it, it's going to happen," said Maryann Keller, a longtime automotive consultant and analyst.
Toyota already has overtaken Ford Motor Co. to become the world's second-largest automaker. By 2006, it is shooting to sell 8.5 million cars and trucks worldwide, edging close to GM, ranked No. 1 since 1931. If Toyota surpasses GM, that would have a profound psychological impact on the U.S. industry, one of the last manufacturing sectors where Americans still lead. It would also undermine GM's ability to dominate the industry and buffet smaller players such as DaimlerChrysler AG's Chrysler Group with its price wars.
As the two auto giants compete in every segment and every region, GM faces a dynamic challenger in Toyota that is not only similar in scale but also draws strength from its superior profitability.
At the North American International Auto Show last month, Toyota board member Yoshimi Inaba downplayed the automaker's ambitions.
"Every manufacturer, every corporation needs some growth," he said.
At the same show, GM Chairman and CEO Rick Wagoner sounded defensive. "We've been ahead for 73 years in a row, and the betting odds are we'll be ahead for the next 73 years," he said.
But Toyota has the upper hand as GM struggles through its toughest stretch since a near-bankruptcy in the early 1990s.
GM's unresolved problems -- a bloated staff and too many brands -- are now exacerbated by unforeseen factors. Soaring health care expenses, rising to $5.6 billion this year, have eclipsed its hard-won gains in quality and cost control.
Despite GM's assertion that its prospects will brighten in 2006 with the rollout of new large pickups and sport utility vehicles, Wall Street is worried. Debt-rating agency Standard & Poor's is reviewing a possible downgrade of GM to junk-bond status.
With its Triple-A rating and $36 billion cash hoard, Toyota seems unstoppable. It holds 44 percent of the impenetrable Japanese market. In the United States -- the key battleground -- it has doubled sales to 2.1 million vehicles in 10 years.
But the company's success poses new challenges. Toyota executives are under enormous strain to attain their sales goals without compromising the vaunted quality of the vehicles.
Toyota is also keenly aware of hungry rivals in South Korea -- and newcomers in China -- that are charging from behind with good cars built at rock-bottom costs. A reinvigorated Nissan Motor Co. is growing faster than Toyota in North America and has overtaken Honda Motor Co. to become Japan's No. 2 carmaker. Nor do Toyota's bosses underestimate Detroit's will to come roaring back.
...
"The idea of the regional Big Three is dead -- the issue now is who will be the Global Big Three," said David Cole, chairman of the Center for Automotive Research in Ann Arbor. "GM and Toyota will be two of them. I'm not sure who the third will be."
Stretch marks
With Toyota ramping up production rapidly in North America, the automaker is relying more on U.S. managers to steer startups. Its Princeton, Ind., factory is the "mother plant" for a truck plant under construction in San Antonio, Texas.
For more than 40 years, the Toyota Production System was taught by practiced experts who supervised their pupils. Stressing kaizen, or continuous improvement, the system encourages everyone, from top managers to line workers, to seek ways to improve operations and eliminate waste.
"The Toyota culture has been a great source of strength, with everyone working off a common playbook," said Christopher Richter, auto analyst for Merrill Lynch in Tokyo. "Now you've got a lot of people coming into the company at the same time, and they have to try to keep that culture from getting too diluted."
Toyota's top bosses may be setting ambitious goals to sustain the momentum that brought the company to its current heights, he said. "You're one of the biggest automakers, you're the most profitable automaker, and you want to prevent a culture of complacency from settling in."
Rivals are redoubling efforts to instill quality in their manufacturing process -- and GM has achieved the biggest strides among the U.S. automakers.
In U.S. quality rankings, Toyota Motor still leads the industry, and its premium Lexus brand perennially wins top honors. But Toyota-brand vehicles slipped behind Cadillac and Buick models in the last J.D. Power and Associates survey of vehicle quality in the first 90 days of ownership. Because of the Toyota brand's strength, its vehicles retain value better than Cadillac or Buick cars, says Raj Sundaram of Automotive Lease Guide. But perceptions tend to catch up with reality.
Senior Toyota officials recognize the danger. "A lot of the things we discuss among high-level executives have to do with quality," Inaba said. "How do you maintain quality during this period of high growth and beyond? This is something we're always discussing."
...
To instill its standards, Toyota recently opened a Global Production Institute in Toyota City, Japan, where overseas workers are trained by expert Japanese operators on assembly techniques. Rising managers are steeped in the company culture at the Toyota Institute, whose curriculum was developed with the help of the Wharton School.
As part of the "continuous improvement" mantra, Toyota has expanded early-detection systems to nip problems in the bud. It set up a squad of two dozen Japanese troubleshooters in Torrance, Calif., two years ago. Instead of waiting for dealers' reports of problems to pile up, the specialists now check on rare and minor glitches.
"Problems get fixed faster," said Don Esmond, head of U.S. sales for the Toyota brand. "Before, by the time they were explained to Japan and they got back to us, there was a lag.
"Maybe we're a little paranoid, but there's nothing wrong with that."
If not paranoid, Toyota certainly is wary. It shies away from mergers and acquisitions, although it retains a keiretsu, a web of associated companies and suppliers, such as Denso Corp. and Aisin Seiki Co. Ltd.
Steady as she goes
In his autobiography "Shift," Nissan CEO Carlos Ghosn describes Toyota as "imperious and sure of itself."
Yet the company is also deeply provincial and cautious. Toyota lets others blaze trails and tracks their progress from its headquarters in central Japan's Aichi prefecture. It established production operations in the United States after Honda. It lags Nissan in its bid to challenge Detroit's automakers in the lucrative full-size pickup segment. Skittish about the Chinese market, Toyota missed out on a recent sales boom.
Despite its prudent approach, Toyota has its share of slip-ups. Most recently, its Echo compact tanked in the U.S. market. But with its plentiful resources, Toyota keeps trying. It will pull the Echo from the lineup and replace it with two small cars.
The automaker can afford costly forays into new technologies. It scored big with its Prius gas-electric car, with orders far outpacing production. While it's unclear whether its hybrid program makes money -- rivals say it doesn't -- the clean cars have earned Toyota high marks for good citizenship. This year, it will launch two SUVs equipped with its fourth-generation hybrid technology.
Under pressure to follow Toyota's lead, GM and DaimlerChrysler teamed up in December to develop hybrid powertrains.
"Toyota is using its deep pockets," said GM Chief Financial Officer John Devine. "They have more (money) than any of us, so they can afford to lose a lot of money on the Prius."
But Toyota's biggest strength lies in its unwavering focus on its main objectives: making better cars and lowering costs.
While GM spent billions snapping up new brands, wasting $2.4 billion on an ill-advised investment in Fiat Auto SpA, "Toyota stuck to doing what it did best," Keller said. "They make a car, and then they make the next one better and see where the customer is taking them. They never look for a silver bullet."
"We spend $4 billion, if not more, each year than the No. 2 global auto manufacturer" on health care, said Wagoner, referring to Toyota.
That money could be used to build new plants, develop new technologies or reward shareholders, he says. "Over time that has an impact."
While GM, Ford and Chrysler benchmark the Japanese, Toyota is keeping close watch on lower-cost automakers in Asia. "We conduct research on our Korean competitors, and that is reflected in our considerations," says Toyota President Fujio Cho. "They have improved quality substantially. They produce vehicles at very low cost, and we consider them formidable competitors."
To lower its costs, Toyota has developed a basic platform, or chassis, for five vehicles -- three pickups, a sport utility and a minivan -- that will be built in low-cost plants in south Asia, South Africa and Latin America. Called the Innovative International Multi-purpose Vehicle project, it is expected to generate big savings by sharing components across 500,000 vehicles a year.
"From the U.S. perspective, Toyota looks like it's growing rapidly, but it has been growing a lot faster in the developing world," Richter says. "They want to grow rapidly in these markets, and they want to do it in a profitable way."
A long, hard winter
At the Detroit car show, Wagoner was braced for reporters' questions about Toyota's ascent.
"Look at China -- can we beat Toyota? Absolutely," he said.
...
http://detnews.com/2005/specialrepor.../A01-87977.htm
Registered User
Joined: Jul 2003
Posts: 3,769
From: cinci
Re: Toyota: They never look for a silver bullet
Good read. I just don't understand why Toyota doesn't expand into a more sporty segment. There is definately lots of money to be made there and a more loyal following to be had. I guess that is good for the U.S. automakers as they can still comfortably retain their lead there.
GM could stand to learn a little from Toyota.
GM could stand to learn a little from Toyota.
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Joined: Mar 2001
Posts: 4,000
From: TX Med Ctr
Re: Toyota: They never look for a silver bullet
Who would have guessed that a conservative approach of constant improvement would pay off in the long run? I would have figured it would have been better to design the cars to fall apart after three years so that the customer would have to buy a new one.
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Joined: Feb 2003
Posts: 439
From: Northern VA
Re: Toyota: They never look for a silver bullet
Who would have guessed that a conservative approach of constant improvement would pay off in the long run? I would have figured it would have been better to design the cars to fall apart after three years so that the customer would have to buy a new one.
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Joined: Aug 2003
Posts: 3,011
From: Exton, Pennsylvania
Re: Toyota: They never look for a silver bullet
Originally Posted by Todd80Z28
Chrysler is doing OK, so there's still a market for the latter.
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Joined: Sep 1998
Posts: 4,320
From: Memphis
Re: Toyota: They never look for a silver bullet
Originally Posted by RussStang
Yeah, and there still is a market for the latter as well. Toyota does not make one interesting car anymore.
Lexus? I think the new IS350 is badass... I mean, come on, it's the fastest car in its segment unless you consider the CTS-V, M3, and S4 in its segment, but realistically they're priced 15-20k dollars high for a reason. I'm talking the 35k dollar entry level sedan market.
The GS460 will be out for 07 sporting the new 8-speed auto and 400hp... I'd say that's pretty competetive with the competition, especially considering the GS460 won't even be charging a 'premium' for its motor... it's poised to be priced right along side any of the other standard V8s.
If the IS460/IS500 comes out w/ 400hp that should be quite exciting, too IMO.
And while the Lexus LS460's primary purpose is to *not* be exciting, I think it's exciting just to see some of the feature sets they've got available for it.
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Joined: Aug 2003
Posts: 3,011
From: Exton, Pennsylvania
Re: Toyota: They never look for a silver bullet
Yeah, I meant Toyota and Lexus. I do actually like the Tacoma, but that is about it. The new IS350 is a nice luxury car, but is far from exciting, at least on my list of exciting. I know it is far more performance oriented than it used to be, but that isn't exactly saying a whole lot. I am sure the IS460/IS500 will be nice cars, and will be pretty sporty, and competitively priced, but they are still unlikely to completely remove Lexus and its parent company Toyota of their hard earned boring stigma.
I know I am repeating the same thing that has been said countless times before, but Toyota would do well to give rebirth to it's Supra name. The Supra is still known to many as a high performance exciting car, and if Toyota could price it in the 30,000s, they could have a successful 350z competitor on their hands. Nissan seems to have no problem selling those, even years after they were introduced. It would give Toyota at least somewhat of an exciting image too.
It would be nice to see another mid engined sports car from Toyota as well, in the spirit of the MkII MR2s. The MkIII MR2s were rubbish.
I know I am repeating the same thing that has been said countless times before, but Toyota would do well to give rebirth to it's Supra name. The Supra is still known to many as a high performance exciting car, and if Toyota could price it in the 30,000s, they could have a successful 350z competitor on their hands. Nissan seems to have no problem selling those, even years after they were introduced. It would give Toyota at least somewhat of an exciting image too.
It would be nice to see another mid engined sports car from Toyota as well, in the spirit of the MkII MR2s. The MkIII MR2s were rubbish.
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Joined: Sep 1998
Posts: 4,320
From: Memphis
Re: Toyota: They never look for a silver bullet
Originally Posted by RussStang
Yeah, I meant Toyota and Lexus. I do actually like the Tacoma, but that is about it. The new IS350 is a nice luxury car, but is far from exciting, at least on my list of exciting. I know it is far more performance oriented than it used to be, but that isn't exactly saying a whole lot. I am sure the IS460/IS500 will be nice cars, and will be pretty sporty, and competitively priced, but they are still unlikely to completely remove Lexus and its parent company Toyota of their hard earned boring stigma.
I know I am repeating the same thing that has been said countless times before, but Toyota would do well to give rebirth to it's Supra name. The Supra is still known to many as a high performance exciting car, and if Toyota could price it in the 30,000s, they could have a successful 350z competitor on their hands. Nissan seems to have no problem selling those, even years after they were introduced. It would give Toyota at least somewhat of an exciting image too.
It would be nice to see another mid engined sports car from Toyota as well, in the spirit of the MkII MR2s. The MkIII MR2s were rubbish.
I know I am repeating the same thing that has been said countless times before, but Toyota would do well to give rebirth to it's Supra name. The Supra is still known to many as a high performance exciting car, and if Toyota could price it in the 30,000s, they could have a successful 350z competitor on their hands. Nissan seems to have no problem selling those, even years after they were introduced. It would give Toyota at least somewhat of an exciting image too.
It would be nice to see another mid engined sports car from Toyota as well, in the spirit of the MkII MR2s. The MkIII MR2s were rubbish.
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From: Exton, Pennsylvania
Re: Toyota: They never look for a silver bullet
Originally Posted by Threxx
Do me a favor and drive an IS350. It may be refined but it's far from boring and will also smoke the CTS, 330, A4, and so on, quite handily.
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Joined: Jun 2001
Posts: 4,600
From: Pewee Valley, KY
Re: Toyota: They never look for a silver bullet
Originally Posted by Threxx
Do me a favor and drive an IS350. It may be refined but it's far from boring and will also smoke the CTS, 330, A4, and so on, quite handily.
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Joined: Sep 1998
Posts: 4,320
From: Memphis
Re: Toyota: They never look for a silver bullet
Originally Posted by 91_z28_4me
It will be interesting to see how the next CTS sport does against the new IS when it carries a 300 hp V6 and could have an OHC V8 mid model that could be in excess of 350 hp.
I'm not surprised by the V6 but I am surprised to hear of a V8 mid-model when they've got the CTS-V, still.
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Joined: Apr 2004
Posts: 561
From: Ventura County, CA
Re: Toyota: They never look for a silver bullet
Originally Posted by Threxx
Do me a favor and drive an IS350. It may be refined but it's far from boring and will also smoke the CTS, 330, A4, and so on, quite handily.
It would be an excellent idea to bring back the Supra and price it with new Camaro, Stang, 350Z and all the others that compete in that class. It would be a good idea to generate excitement for the brand at all. I wonder how long they're reputation of being dependable boring transportation can last without generating some kind of buzz with their brands?
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From: Melbourne, Australia
Re: Toyota: They never look for a silver bullet
Originally Posted by Ryan's LT1
I wonder how long they're reputation of being dependable boring transportation can last without generating some kind of buzz with their brands?
Consumers are to blame, not Toyota. Consumers don't do anything to punish them the same way they punished Nissan... at least Nissan have produced some great sportscars... but they also offered a lot of bland & boring vehicles and buyers stayed away.
