Posted by: Ian Rowley on February 21, 2006
Another day, another cost saving at Toyota. Reports today reckon the auto giant has trimmed the costs of engines in the new Camry (above) by half, compared with the old version. With savings like that it’s little wonder that Toyota’s operating margins are 9%, while its market value, which exceeded Wal-Mart’s on Friday, keeps rising. Still, impressive as half-cost engines may be, it’s hardly a big shock. Before taking the reins as CEO of Toyota in June, Katsuaki Watanabe played a big role helping the company slash costs under a program called CCC21. Under that system, Toyota cut how much it spays for parts by 30%, helping the Japanese juggernaut save $10 billion in five years. Expect more savings to follow now Watanabe is CEO. In particular, a new initiative called Value Innovation is set to bring more savings. Toyota says VI will take a more “systems-based” approach to trimming costs rather than looking to save a few yen here and there on individual parts. So far, details of exactly what VI will mean in practice remain scant, but it’s understood that as part of VI Toyota’s engineers and suppliers are hunting for savings far earlier in the vehicle planning process. And with Toyota confirming earlier this month that the fruits of VI are expected to start being seen by the end of this year—earlier than previously thought—no one would bet against more cost reductions.