Businessweek Archives

Will Less Be More For Toyota's Camry?


Cover Story

WILL LESS BE MORE FOR TOYOTA'S CAMRY?

When Toyota Motor Corp. unveils its restyled 1997 Camry, a tiny button will be missing from the dashboard. The button automatically resets the Camry's digital clock to the top of the hour so drivers can instantly synchronize their clocks to radio time-checks. It's a big hit in gadget-loving Japan, but Americans don't know what it is.

The clock button won't be the only thing gone when the new model is unveiled a little over a year from now. With the yen soaring, Toyota is racing to cut out nearly one-third of the Camry's parts. "Affordability is the No.1 priority," says Camry chief engineer Kosaku Yamada. "The Camry is not a luxury car."

Toyota's "decontenting" of the 1997 Camry represents a startling U-turn. Japan's biggest auto maker spent the past decade loading cars with an array of snazzy features. But when the yen's rise pushed the Camry's average selling price above $20,000, alarms went off. "We had adopted a Lexus mentality throughout the company, where even the ashtray on the Tercel had to be the best in the world," recalls John Shook, a former Toyota executive who now teaches Japanese management at the University of Michigan.

EASIER TO ASSEMBLE. Now, Camry engineers are scrutinizing every nut and bolt. Their goal: to trim the cost of developing and building the Camry by up to 20%, to an estimated $500 million. That should enable Toyota to cut $1,000 off the sticker price, while earning 5% gross margins. Today, Toyota barely breaks even on U.S. Camry sales.

Some insiders fear Toyota will go too far, however. "They went overboard one way, now they could go overboard the other," frets one Toyota veteran. But Yamada promises the changes will be invisible to U.S. customers, who account for two-thirds of Camry sales worldwide. To doubters, he points to the revised Japanese Camry, which was introduced a year ago with 41% fewer parts and 176 fewer pounds than the original. Most of the content Toyota is taking out of the American Camry will come from melding mundane little parts--in the seating unit or the dashboard, for example--into easy-to-assemble larger components that eliminate the need for excessive nuts and screws. "Our engineers try to find ways to make each component's cost a little bit lower by changing materials or thickness of the metal," says Toshiaki Taguchi, a Toyota managing director.

LESS IS MORE. The need to eliminate excess content became painfully clear after Toyota engineers tore apart the redesigned 1992 Ford Taurus. They made an embarrassing discovery: The Taurus front bumper had far fewer parts than the Camry's. So engineers set about simplifying the Camry's bumper, with its dizzying array of 24 parts and 53 fasteners. Today, Yamada flourishes a secret engineering drawing of the 1997 Camry front bumper, which boasts just four pieces and 15 fasteners.

Ironically, Ford Motor Co. also tore apart and compared the 1992 models of Taurus and Camry. It drew the opposite conclusion--and built more into its car. Ford even made power windows standard on the new Taurus. Not so on the 1997 Camry, where hand-operated windows will still be offered.

In its new less-is-more mode, Toyota wants to ensure it doesn't lose buyers who are willing to crank their own windows in exchange for a lower sticker price. As the Taurus goes upscale, such populist pricing could be a big weapon in the fight to be America's favorite car.By Keith Naughton in Ann Arbor, Mich., with Edith Hill Updike in Tokyo


We Almost Lost the Nasdaq
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus