@ 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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Category: Lean


One Response

  1. abhishek says:

    No doubt Logan was the awesome cars from the Renault and car’s price was also very economical and one more thing I want to share with you that Renault will soon launch a small car which is “Renault Pulse”

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January 2007