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
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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!

  • VoGhost Fantastic work by Honda design. When I first saw the pictures, I thought "Is that a second gen Acura NSX?"
  • V16 2025 VW GLI...or 2025 Honda Civic SI? Same target audience, similar price points. Both are rays of sun in the gray world of SUV'S.
  • FreedMike Said this before and I'll say it again: I'm not that exercised about this whole "pay for a subscription" thing, as long as the deal's reasonable. And here's how you make it reasonable: offer it a monthly charge. Let's say that adaptive headlights are a $500 option on this vehicle, and the subscription is $15 a month, or $540 over a three year lease. So you try the feature for a month, and if you like it, you keep it; if you don't, then you discontinue it, like a Netflix subscription. In any case, you didn't get charged $500 up front the feature. That's not a bad deal.In my case, let's say VW offers an over the air chip reflash that gives me another 25 hp. The total price of the upgrade is $1,000 (which is what a reflash would cost you in the aftermarket). If they offered me a one time monthly subscription for $50 to try it out, I'd take it. In other words, maybe the news isn't all bad.
  • 2ACL A good car, but - at least in this configuration -not one that should command a premium. Its qualities just aren't as enduring as those of Honda's contemporary sports cars. For better or worse, this is a formula they remain able to replicate.
  • Jalop1991 I just read that Tesla's profits are WAY down "as the electric vehicle company has faced both more EV competition from established automakers and a slowing of overall EV sales growth." This Cadillac wouldn't help Tesla at all, but the slowing market of EV sales overall means this should be a halo/boutique car. Regardless, yes, they should make it.