@ Supply Chain Management


Toyota plans ultra-inexpensive car

As reported in the news today, Toyota plans ultra-inexpensive car – Wow!

Toyota Motor Corp. plans to build a low-cost car undercutting Renault’s emerging-market Logan through a “radical” rethink in design and production, the president of the fast-growing Japanese automaker said.

What is the Logan from Renault? (More information available at Wikipedia)

The Renault Logan is the latest car to enter the super budget automobiles, and will compete with the best of the world’s cheapest automobiles.

Renault aims to retail the car for Eur 5000 (about $6105) and the competition that its expected to take on are:

Targets for the Renault Logan include Rover’s CityRover, Kia Picanto, Seat Arosa, Daihatsu Cuore, Daewoo Matiz and shortly the Volkswagen Fox.

So what does Toyota plan in order to take on the competition?

“The focus is on low-cost technology,” Toyota president Katsuaki Watanabe told Britain’s Financial Times newspaper in an interview published Monday.
He declined to set a price for a low-cost car but said it would be “at least” less than the Logan.

Like I have said many times before, Toyota may come in above the Logan’s price to begin with in their first iteration but one can’t fault them for knowing what the market would support. And if you’re aiming to compete as the low-cost technology, they will quickly apply their TPS and continuous improvement methodology and push that price lower, lower with every continuing iteration.
Here’s the principal idea outlined by Toyota’s CEO:

Watanabe said that Toyota could slash the price by targetting costs throughout production.
“Everything from design to production methods will be radically changed and we are thinking of a really ultra-low-cost way of designing, using ultra-low-cost materials, even developing new materials if necessary,” he said.

Again, Toyota is focusing on its twin competencies of product design and production rather than advertising and financing to execute their strategy of competing in the low-cost car segment. Also consider their built-up experience in hybrids and whether hybrid power systems will get cheap enough to be put under the hood of a low-cost car.
Needless to say that this announcement will sound a loud boom across the bow of US carmakers.

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Former chairman and CEO set to buy back Swift Transportation

Logistics Management reports on the goings on with Swift Transportation (going on since November 2006 if I remember right).

After an unsuccessful attempt to buy truckload carrier Swift Transportation Co. Inc. in November, a group led by the company’s former chairman and CEO Jerry Moyes has entered into a definitive merger agreement to acquire Swift in an all-cash transaction for approximately $2.74 billion

And he’s taking it private?

“Swift has evolved into the operator of the largest truckload fleet in the United States with a dedicated and energetic team of employees, over 17,900 trucks and nearly $3.2 billion in revenues,” said Noyes in a statement. “I am extremely pleased to have reached this agreement with Swift and look forward to building on the unique Swift legacy that has positioned the Company for continued growth and success.”

What can I say? “A swift end to a public Swift truckload carrier.”

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About me

I am Chris Jacob Abraham and I live, work and blog from Newburgh, New York. I work for IBM as a Senior consultant in the Fab PowerOps group that works around the issue of detailed Fab (semiconductor fab) level scheduling on a continual basis. My erstwhile company ILOG was recently acquired by IBM and I've joined the Industry Solutions Group there.

@ SCM Clustrmap

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January 2007