By on January 11, 2011

“There have been companies that have gone belly-up for carrying excess capacity, but no company has gone bankrupt for not being able to produce, We now realize humbly that we shouldn’t make cars until we’re absolutely certain they will sell.”

Toyota’s Executive Vice President Atsushi Niimi to Bloomberg.

Volkswagen, still planning to dethrone Toyota, isn’t outselling Toyota just yet.  Outspending? Definitely. Volkswagen plans to spend $53.5 billion in new property, plant and equipment in the next five years, $10 billion more than ToMoCo.

Toyota wants to produce more cars without spending additional money. “We are challenging ourselves to produce more even as we restrain capital spending,” Akio Toyoda said yesterday at NAIAS.

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9 Comments on “Quote Of The Day: Toyota Wants More For Less...”


  • avatar
    MrFixit1599

    Ok, just my own opinion, but Toyota has recently gone the way of Gm of the 80’s, build it to a price.  Most Japanese companies have.  The American companies have hopefully realized that doesn’t work anymore.  The Korean car companies are making cars that are damn near as good, if not better in some cases than any of them.  I guess I am just wondering when the first Chinese car manufacturer will start a production plant in the USA at this point.

    • 0 avatar
      aspade

      All product is built to a price.
       
      Japan’s decontenting problem is that people remember the spectacularly good products they used to build for us – in the happy times when the yen was toilet paper and deficit spending hadn’t destroyed the dollar yet – and can see that something went wrong.  That something being that you aren’t getting a $30,000 car for $20,000 anymore.
       
      Detroit has avoided blame for this by building garbage all along.  A Chevy with hard mismatched plastic, panel gaps, and an appetite for intermediate steering shafts isn’t decontented it’s business as usual.
       
      Toyota’s way out is protecting themselves from the worthless dollar by building cars here where their costs are in those same worthless dollars.  In 2007 53% of Toyotas were made in the US.  Last year 66% were.   In 4 more years it’ll be 75%.  That will help a little.
       
      But they’ll never be able to sell you a $30,000 car for $20,000 again.  Hyundai could give you a $25,000 car for $20,000, briefly, but the window for that is closing fast. They’ve repaired their name and don’t have to run loss leaders any more. The Genesis may be an exception.

    • 0 avatar
      geozinger

      @aspade: I fail to see how Detroit can be blamed for the rise of the Yen and foreign manufacturers having to build to a price. As you said all product is built to a price. Due to a number of factors, the D3 was forced to decontent, or more specifically de-cost their cars. After a certain point in time, the Japanese mfrs had no choice but join in this practice of de-costing by mfg locally or decontenting. Even after mfg locally, the D3 were still selling enough cars, and other factors (exch rates), so the decontenting began. With a new cost structure in the US for the domestics, it wont be long before we’ll see the transplants beating up their suppliers for price concessions. There’s no place left to take out any cost after a while.
       
      Well, maybe Mexico. But that would ruin the PR value of mfg in the US, wouldn’t it?
       
       
       

    • 0 avatar
      aspade

      I fail to see how Detroit can be blamed for the rise of the Yen and foreign manufacturers having to build to a price.
       
      Not for exchange rates.  Detroit is not blamed for practicing decontenting themselves.
       
      Well, maybe Mexico. But that would ruin the PR value of mfg in the US, wouldn’t it?
       
      Assembly in Mexico is a given.  We’re already getting there.  Although their ongoing civil war is slowing it down.  But more and more sub assemblies are coming in from the price concession mother ship, China.

  • avatar
    Hank

    There’s building to a price, and there is building to a quality standard at the best possible price point.  The former got GM its reputation, the latter built the Japanese theirs. GM is learning, the Japanese are getting pounded by what looks to me like malaise, plus currency fluctuation, and some serious competition. Competition is good, currency fluctuation is largely out their control (but adaptation is possible), and getting off their duffs and designing and engineering great vehicles people actually want is well within their abilities if that is their goal.

  • avatar
    rfahey

    Caption suggestion:

    “Wonder Twin powers, activate!”

  • avatar
    threeer

    Maybe I’m going to be accused of being overly patriotic and just a tad more concerned than I need to be, but I really hope that the Chinese do NOT make inroads into America’s automotive scene.  I’m already dismayed enough when 100% of the items I buy in most any store these days comes from China and wonder when (if ever) the general American public will wake up and really see just how far we’ve slipped.  Maybe I’m wrong, but we can’t generate personal (and national) wealth without making/building goods, and that includes a strong automotive sector.  Maybe cars will be the tipping point for us in attempting to rebuild our national manufacturing sector…or (more likely) it’ll just be one more nail in the coffin as we move to becoming a subset of the Chinese economy.
    I’d rather see the D3 (what’s left of them) take the road of a Hyundai/Kia, versus Toyota…better value, more content, a killer warranty and entertaining styling to combat the competition, but maybe I’m asking for too much. 

    • 0 avatar
      colin42

      In general people want items at the lowest possible price – we all do it – shop at Walmart rather than (Enter the name of local independent supermarket here) or shop online to save 10% compared with a local store.

      In general Americans will buy “Made in America” products but only if the price is the same or close.

      When it comes to Domestic brand cars the fact that made in America often really means “North America” i.e. Canada / USA / Mexico is often missed by the I only buy American crowd.

      I could argue about how the high cost of health care to employers is one of the primary drives of Jobs out of USA but I’ll save that for another time!

  • avatar

    Toyota is right.
    Over-capacities are a nightmare and need to be avoided. As the costs are immense, this is nothing but a massive incentive for bean counters to find other ways to save money. Nobody will profit from such scenarios. It’s just a loose-loose game for everybody involved.

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