War Footing: Toyota CEO Unleashes 'Seven Samurai' in Bid for Survival

Steph Willems
by Steph Willems

You need cash if you’re going to make it in this industry, and Toyota CEO Akio Toyoda wants more of it. The automaker’s top executive, who characterizes the dangers facing his company in the same manner of a military general defending the Japanese mainland, has launched an all-out assault on what he fears is Toyota’s biggest threat: unnecessary expense.

“With our rivals and the rules of competition also changing, a life-or-death battle has begun in a world of unknowns,” Toyoda said during a fiscal update last week. “Cost reduction is crucial. It is a fight to restore our original strength.”

To shore up his business’s finances in preparation for new investments, Toyoda has seven warriors ready to slash costs wherever savings can be found.

As reported by Automotive News, the effort comes even as the automaker reports record global revenue for the just-ended fiscal year. Is it paranoia, or just an abundance of caution? Toyoda claims the latter, as those boosted revenues came as a result of pleasing exchange rates and a one-time U.S. tax cut.

“Only the fat remained,” Toyoda said of earlier cost-cutting efforts. “In the fiscal years to follow, we must make sure Toyota becomes a muscular company so that we can take up the challenge of new competition.”

The goal here is finding $1.22 billion in efficiencies by March 31st, 2019.

Heading up the latest round of cost cutting is a group of like-minded executives Toyota calls the “Seven Samurai,” whose job is to peer into every corner of the company in search of savings. The plan goes as far as slashing non-essential meetings and setting a one-hour time limit for those that remain. Vehicle specifications won’t escape scrutiny, either.

If the automaker hopes to compete in the realm of electric vehicles and autonomous technology, Toyoda claims, it first needs to grow its profit margin — especially in North America.

In the last fiscal year, Toyota nearly halved its operating losses in that key region. However, its operating margin stood at just 1.3 percent at the end of March. Toyota’s chief financial officer (and one of its “Samurai”), Koji Kobayashi, wants 8 percent, and he wants it by 2020.

Volume fell in North America in the first quarter of 2018, with sales down 2.5 percent. While the automaker’s North American boss, Jim Lentz, claims Toyota will always have a more car-heavy mix than its rivals, it does want to bolster its light truck sales. There’s room for more crossovers in the brand’s portfolio, the company suggested recently, and its ancient full-size Tundra pickup (and the Sequoia SUV derived from it) is long overdue for a revamp.

In the product sphere, Toyota has a new Corolla hatch, Corolla sedan, Avalon, and RAV4 arriving in the next year and change.

[Image: Steph Willems/TTAC]

Steph Willems
Steph Willems

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  • 28-Cars-Later 28-Cars-Later on May 21, 2018

    Toyoda is correct, the actual cost to mfg has gone up significantly and has outpaced wages. He cannot directly change the economic stagflation being experienced in the West, all he can do is attempt to reduce his cost to bring his out the door pricing more in line with what the market can actually afford.

  • AtoB AtoB on Jun 03, 2018

    Dear Toyota. Want to cut useless spending? Phase 1: Ditch hydrogen. Hydrogen is stupid. Phase 2: Instead use the Mirai fuel tank tech to make a serial hybrid CNG cars. Use the monies you'd have used for the hydrogen network to improce CNG access instead. Phase 3: Profit!

  • ToolGuy This might be a good option for my spouse when it becomes available -- thought about reserving one but the $500 deposit is a little too serious. Oh sorry, that was the Volvo EX30, not the Mustang. Is Volvo part of Ford? Is the Mustang an EV? I'm so confused.
  • Mikey My late wife loved Mustangs ..We alway rented one while travelling . GM blood vetoed me purchasing one . 3 years after retirement bought an 08 rag top, followed by a 15 EB Hard top, In 18 i bought a low low mileage 05 GT rag with a stick.. The car had not been properly stored. That led to rodent issues !! Electrical nightmare. Lots of bucks !! The stick wasn't kind to my aging knees.. The 05 went to a long term dedicated Mustang guy. He loves it .. Today my garage tenant is a sweet 19 Camaro RS rag 6yl Auto. I just might take it out of hibernation this weekend. The Mustang will always hold a place in my heart.. Kudos to Ford for keeping it alive . I refuse to refer to the fake one by that storied name .
  • Ajla On the Mach-E, I still don't like it but my understanding is that it helps allow Ford to continue offering a V8 in the Mustang and F-150. Considering Dodge and Ram jumped off a cliff into 6-cylinder land there's probably some credibility to that story.
  • Ajla If I was Ford I would just troll Stellantis at all times.
  • Ronin It's one thing to stay tried and true to loyal past customers; you'll ensure a stream of revenue from your installed base- maybe every several years or so.It's another to attract net-new customers, who are dazzled by so many other attractive offerings that have more cargo capacity than that high-floored 4-Runner bed, and are not so scrunched in scrunchy front seats.Like with the FJ Cruiser: don't bother to update it, thereby saving money while explaining customers like it that way, all the way into oblivion. Not recognizing some customers like to actually have right rear visibility in their SUVs.
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