Toyota Rolls Out Shared-Parts Strategy to Chop Costs

TOKYO – Toyota (IW 1000/8) on Thursday announced plans to overhaul production to slash development costs, with a top executive describing the shakeup as crucial to navigating "sudden and drastic changes" in the auto sector.

While the Japanese car giant is on track for a record $18 billion fiscal year profit, largely due to a weak yen and strong North American sales, the world's biggest automaker said it needs to go further to protect its bottom line in a fast-changing market.

"Sudden and drastic changes in the business environment mean that conventional ways of thinking and doing business can no longer help us grow sustainably," Toyota President Akio Toyoda said in a statement.

"We are at a crossroads where we must now build a new business model."

The company said it would boost the fuel efficiency of its powertrains -- the engine and transmission -- and build more new models on common platforms, as its rivals also boost the number of shared parts on different vehicle models.

But Matsumura warned the moves could result in huge recalls if the same defective part was found across a company's vehicle models.

Major automakers are reeling from the recall of millions of cars globally for various problems, including an exploding air bag crisis at embattled supplier Takata.

The scandal has sparked the recall of more than 20 million vehicles worldwide by 10 major automakers.

"This strategy... can be a double-edged sword," Matsumura said. "So Toyota and its rivals are likely to boost their investment on improving quality control."

Toyota is now reportedly set to lift the three-year freeze on new plants with the construction of a Mexican factory worth more than $1.0 billion. The ban was imposed following an aggressive expansion over the past decade.

Copyright Agence France-Presse, 2015