Toyota says that it is planning to work toward a 20 percent cut in production costs in an effort to make its small cars more profitable in spite of a fluctuating yen.
The automaker says it needs to be able to make money at 80 yen to a United States dollar, the current exchange rate. It has said that it can’t make money on small subcompact and compact cars at anything below 90 yen to the dollar. Toyota makes far more cars in its home market of Japan than rivals Nissan and Honda, although most of its cars sold in the U.S. are built here or in Canada.
“If we can cut costs by around 20 percent, we can fully compete even at 80 yen,” Toyota executive Atsushi Niimi said in an interview with the Wall Street Journal. “By 2013, new models made in Japan have to be competitive at that level.”
Toyota isn’t planning to cut any factories in Japan. Instead, it says it will completely rethink its production and design process to cut at every level. For example, Niimi said that Toyota will better integrate its Prius hybrid’s gasoline and electric motors to reduce the number and complexity of parts involved. Toyota will also look to increase its importation of low cost, low complexity parts from China, a move that would put it in line with many other automakers – although it isn’t expected to follow in Ford’s footsteps by producing larger units like transmissions in China for export.
References
1.’Toyota aims to…’ view
