Toyota Promises Better Cars and Bigger Savings
Toyota (NYSE:TM) revealed on Monday a new framework for vehicle development, which will make its cars more appealing and cut costs by at least 30 percent through the use of more shared parts.
Chief Executive Officer Akio Toyodo has blamed unchecked sales growth due to Toyota’s penchant to building popular but unexciting cars. Mr. Toyodo is now looking to develop cars that customers would want, rather than make cars that will bring in revenue. He is also focusing on making better quality products.
The new framework is known as Toyota New Global Architecture. Under TNGA, Toyota will develop multiple models simultaneously to boost the number of common parts, which will lower costs and free up resources that could be shifted to pursuing varying regional needs.
According to Toyota, the company will also give more authority to chief engineers and cut down on the number of executives involved in the design review process. Toyota will do away with the many layers of decision making that is proving to be problematic at the company. Toyodo asserts that by having too many people weigh in on the development of cars, the main focus becomes about eliminating negatives and not creating something positive by taking risks.
Cooperation between the planning and design divisions will allow more design freedom. Toyota has announced that it will initiate TNGA with three front-wheel-drive vehicle platforms that will cover around half of the cars it produces. The new platforms will feature a lower center of gravity to improve styling and vehicle handling, which is seen in the NS4 plug-in hybrid concept showcased at the Detroit auto show in January.
Vehicle appeal is now a newly important factor to attract customers. Toyoto’s new initiative is to spice up its cars as rivals improve their vehicles in quality and fuel efficiency. South Korea’s Hyundai and Kia are offering vehicles that are aggressively styled and packed with features, causing more established brands to retaliate with better automobiles.
Honda (NYSE:HMC) is also making similar structural changes to speed up decision-making and encourage more risk taking within the company.