TOKYO -- Toyota hasn't announced a target for its latest cost-cutting program. But a peek into one sliver of the project shows the company is thinking big.
At a recent business seminar near Nagoya, Japan, Toyota CEO Katsuaki Watanabe showed a slide that said a committee exploring savings within Toyota engine compartments wants to trim costs by 30 percent.
"It's their target," Watanabe said. "I hope they will achieve their target." Watanabe's remark doesn't mean Toyota will aim for across-the-board annual savings of 30 percent on all parts. But it does suggest the company has set the bar high.
Toyota's relentless cost cutting is a key part of its quest to gain market share around the world. By saving nickels and dimes, it has the quarters and dollars to spend on new models and customer-pleasing features.
Under the new cost-cutting program, dubbed Value Innovation, or VI, Toyota has set up at least 10 teams that look at different automotive systems.
Each team sets its own savings target and time frame for achieving those savings.
This approach differs from Toyota's previous cost-cutting campaign, known as CCC21. That sought savings in 170 individual parts, which represented 90 percent of Toyota's total parts purchasing costs.
CCC21 found ways to use common parts across different vehicle lines to improve economies of scale.
VI, in contrast, seeks "not to focus item by item but to look at them as entire systems and see how we should adjust the production system," said Takeshi Suzuki, Toyota's senior managing director in charge of the finance and accounting group.
VI aims for "cost reductions several months before the design stage, at the conception stage," he said. In some cases, he noted, "we should modularize and try to see significant reductions" in cost.
The engine-compartment team would look for savings not just from the engine but also from the heating, ventilation and air-conditioning system, electrical components and any other parts or systems inside the engine compartment.
In an interview published in Automotive News in December, Watanabe said, "We are looking more at improving the quality of designs from the systems or modules level."
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