Toyota Vows to Stop Being Such a Dinosaur, Muses Partnerships as a Shortcut

Despite being Japan’s biggest automaker, Toyota has lagged behind many of its rivals in terms of cutting-edge technology. Most major car manufacturers have already begun developing self-driving vehicles, with some going so far as to make strategic partnerships with companies specializing in the applicable technologies. By contrast, Toyota has a strong R&D program but never saw fit to pursue autonomous development or battery-electric vehicles quite so aggressively as General Motors or Renault-Nissan, for example.

Toyota President Akio Toyoda has now admitted that may have been a mistake. At the company’s annual shareholders meeting on Wednesday, he promised the automaker would become more committed to achieving technical developments. Toyoda didn’t bring forward a concrete strategy but conceded the spending of additional capital would likely play a role — and an alliance or two isn’t out of the question.

“The auto industry is undergoing big changes, and issues and ideas which we may have thought were far off in the future could affect us tomorrow. That’s why we need to go on the offensive while also preserving our areas of strength,” Toyoda told investors. “We’ve been investing 1 trillion yen each year for R&D, expanding [capital expenditure] and buying back shares, but this may not be enough. We need to consider all our options, including M&A, to survive in the future.”

Toyota has good reason to want to change. While maintaining the status quo has worked well for the brand in the past, its 2016 operating profits slumped 30.1 percent year-over-year, with sales declining 2.8 percent. The automaker predicts more of the same for this year.

“We know that the company won’t be all right if it remains as it is,” Toyota Executive Vice President Osamu Nagata stressed at the meeting. “We will make every effort possible for a recovery.”

The brand as already accelerated some of its efforts to prioritize technological advancement. Last year, Toyota established an official division specifically for electric vehicle development. It has also invested $1 billion into an artificial intelligence research institute and has struck up moderately sized partnerships with Uber Technologies and Microsoft.

There have been other stirrings as of late, including the automaker wanting to form a partnership with Suzuki. While that strategy wouldn’t alleviate Toyota’s tech concerns, it would give it a foothold for selling smaller cars in other parts of Asia. There were also rumors of the company getting into bed with Mazda back in November, although what possible advantage that would give Toyota is unclear.

Either way, Akio Toyoda has previously admitted his company is “not really good” at creating alliances. That might have to change if the company is to adhere to its vow to reshape itself into a more modern manufacturer.

[Source: Reuters] [Image: Toyota]