Toyota Motor Europe aims to sharply reduce its purchasing and distribution costs in an effort to break even by the end of 2002.
The Japanese automaker's European subsidiary lost e89.6 million in the fiscal year ending March 31, 2000. Toyota has been hurt by the strength of both the yen and the British pound compared with European currencies.
It wants to buy more parts from outside the United Kingdom for its Burnaston plant, in the English midlands.
Toyota this year launched production at its first plant on the continent, in Valenciennes, France. The Burnaston plant produces the Avensis and Corolla, while Valenciennes builds the Yaris.
At Burnaston, Toyota uses 80 percent European-sourced supplies. Of that, 60 percent is purchased in the United Kingdom and 40 percent in mainland Europe. The company wants a 50-50 mix of United Kingdom and mainland sourcing.
'We want to transfer purchasing to other countries, including Poland, Hungry and the Czech Republic, to bring the balance to 50-50,' said Akira Imai, CEO of Toyota Motor Europe.
Eastern European quality is good, Imai said. 'But heavy paperwork and unreliable logistics - with up to 18 hours waiting at borders - need to be solved,' he said.
Meanwhile, Toyota is restructuring its new-car and parts delivery operations in Europe. A second spare parts distribution center will open later this year in Le Pouzin, in southern France. The central parts warehouse is in Diest, Belgium. Toyota is studying the possibility of setting up other European distribution hubs.
'These hubs will be located based on geographical considerations to guarantee 24-hour parts supply and direct new-car delivery to dealers,' said Takis Athanasopoulos, Toyota Motor Europe's new COO.
Meanwhile, Imai said Toyota wants to Europeanize its management. It has five Japanese in its 12-member executive management team in Brussels. The company wants to reduce that to one.
'It is our goal to have a complete European management,' Imai said. 'That process should be completed within five years, and it includes my own position. Only the position of chief financial officer will remain Japanese.'
Maintaining European management is one reason Toyota does not want to operate its own distributors in all European countries. It still works with private distributors in more than 10 countries.
'We have relationships that go back many decades, and we would like to continue with them,' Athanasopoulos said. 'Our only request is that they share our strategies and be willing to make the changes we make.'
Share goal: 5% by 2005
He said Toyota Motor Europe is on track for a targeted 5 percent market share in Western Europe, or 800,000 cars, by 2005. Last year, Toyota's share was 3.7 percent. 'In January, we sold 57,052 units - a 4.1 percent share,' Athanasopoulos said.
This year, Imai expects Toyota's sales volume in Western Europe to be at about last year's level - a little more than 650,000. 'The overall market will stabilize, or may even come down a bit,' he said.
But when an all-new, European-designed Corolla arrives next year, sales should grow again.
Said Athanasopoulos: 'We want to achieve our 5 percent market share in each segment. With Avensis, we have achieved 5.2 percent in a segment which overall has declined.'