Hampered by slowing car sales in the U.S., recalls, and concerns over quality, Toyota management is hoping to curb skyrocketing costs and become a leaner, more profitable automaker once again. One way Toyota plans to do that is to cut auto parts costs by 30 percent.
Toyota has already been in talks with suppliers in order to curb costs by as much as 40 percent on some vehicle components by 2013. Although this will no doubt help to boost profitability, this move also means Toyota will be resorting to lower quality materials as well.
With a looming annual operating loss, Toyota plans on overhauling its entire lineup in order to include lower-cost parts and materials. The move will be important for Toyota to help regain lost ground, but also to help Toyota products become more competitive in developing markets where cost is paramount.
Market conditions have not been kind to Toyota. After taking over the reigns as the world’s largest automaker, the economy put a strain on Toyota here in the US, as well as in Japan. If Toyota manages to curb costs without sacrificing the legendary Toyota quality, the automaker will likely find itself back on top.
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