Japan: Toyota expecting annual cost saving of US$2.7bn from new plan
Wednesday, December 12, 2007, AutomotiveWorld.com
Toyota plans to offset rising commodity prices and development expenses by increasing its efforts to cut costs in 2008. The OEM expects cost savings to reach US$2.7bn annually, Reuters reports, citing Toyota president, Katsuaki Watanabe.
According to Watanabe, this amount is expected to grow with rising sales, as the OEM's plans involve cost reductions on a per-vehicle basis.
Toyota's new cost-saving strategy, VI (Value Innovation) consolidates the numerous components in a vehicle into modules and systems. Although little detail has been divulged as to the programme's targets, Toyota claims that the effects of VI will be more significant and will be realised faster than the previous plan, CCC21 (Construction of Cost Competitiveness in the 21st Century).
CCC21 yielded claimed cost savings of US$9bn over five-years, from a projected capacity to cut US$2.7bn in annual costs.
"The fact that they are planning to build on the CCC21 plan is remarkable, and attests to Toyota's unique strength as a high-volume carmaker and its group companies' solidarity. It will give them a free hand to use their resources flexibly, including securing even more customers by building more attractive features into their cars," the newswire quotes UBS Securities automotive analyst Tatsuo Yoshida as saying.
Toyota intends to reach, and sustain, a 10% operating profit margin. The OEM believes this is a crucial factor, and will enable it to annually invest around ¥1.5tr (US$9bn) each on facilities, and research and development.
The first car to incorporate the VI plan will be a new Crown sedan, scheduled to be launched in Japan in early 2008. Following this, the project will be incorporated into every new model, with the full impact expected around 2010, Watanabe says.
Toyota intends to expand its cost-reduction strategies out of Japan as well and plans to cooperate with component suppliers in North America and Europe in this regard.
By 2010, Toyota is likely to replace the VI project with a newer plan, one that will focus on the vehicle's design as a whole, with particular emphasis on the use of lightweight materials. Watanabe would not divulge further details of this future strategy, but said that the 1/X concept car, unveiled at the Tokyo motor show, showcases elements of this project, according to Reuters.
The 1/X concept, claimed by its maker to weigh 420kg, is one-third the weight of Toyota's Prius hybrid, with twice its stated fuel efficiency.
Toyota, with a market capitalisation of more than US$200bn, posted revenues of US$215bn in its previous fiscal year. The OEM has forecast annual sales of 9.34 million vehicles this year, rising to 10.4 million by 2009, the report says.
Published on Wednesday, December 12, 2007
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