Industry News
Toyota to accelerate cost cutting efforts
12th December 2007
Toyota expects to accelerate its cost-cutting efforts next year to save more than $2.7 billion a year, its president Katsuaki Watanabe told the Reuters news agency yesterday.
Since 2005, Toyota has been working on a new cost-saving strategy called "VI", standing for Value Innovation, which seeks to combine an increasing number of vehicle components into modules and systems. The first car to incorporate the new scheme, a remodeled Crown sedan, is due out early next year. That cost cutting plan’s predecessor, called CCC21 (Construction of Cost Competitiveness in the 21st Century) and led by Watanabe when he was Toyota’s purchasing director, achieved $9 billion of cost savings over five years, equivalent to around 13 percent of Toyota's operating profit of 2.24 trillion yen last year.
In the context of rising materials costs and its aim to invest 1.5 trillion yen in R&D and production facilities, Toyota has targeted cost reduction as an essential contributor to a sustained 10% operating profit margin; a target nearly reached, at 9.3%, in the year to March 2007.
(Reuters/Automotive News Europe, 11 December)
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