Toyota’s growth continues apace – but why is it so successful? As my talk with Ted Agata on page 20 reveals, Toyota chases customers and markets, not component and labour cost cuts. The way cars are sold in Japan might give some clues as to how this approach pays off: car salesmen call on their customers regularly and establish relationships with them, from their first Corolla through their Camry or Avensis, right up until their Lexus and their children’s Toyota purchases. And all the while, they patiently harvest information about the element that really makes sales – their customer’s needs. This is something that the so-called Big 3 (GM, Ford and Chrysler) have lost sight of and it shows in the figures. While US domestic VMs look over the fence at what their Japanese (and now Korean, Malaysian and Chinese) competitors are doing, the smart movers in the global car market stay close to the people who have the real money – the car buyers.
And the results? Toyota will be the top-selling automaker in China by 2012, said Shen Ningwu, Deputy Secretary General of the China Association of Automobile Manufacturers, at a seminar held in Beijing in November 2006. It still trails Volkswagen at the moment but market forecaster CSM Worldwide predicts that by 2012, the Japanese brand’s sales in China will hit 800,000 units in a market of 7.6 million.
In the US, its sales are expected to overtake DaimlerChrysler, and it could finish very close to Ford’s figures, challenging the constitution of the so-called Big 3. In fact, Toyota’s problems are those that most carmakers would give their right arms to have – lack of capacity, the US market burning up demand – plus Toyota is falling behind in its self-imposed goal of building 60 per cent of its sold vehicles in local factories.
Renault’s Logan was seen by many as THE low-cost car for emerging markets, and since 2004, it has sold more than 330,000. Clever use of platform strategy, brilliant design-for production and an intelligent logistics network should have secured it a secure position as a world-beater. Now Toyota will fight Logan with an inexpensive sedan and a separate low-cost brand for these developing markets. The Japanese automaker will debut its new entry-level vehicle by the end of the decade.
It is time for the rest of the world’s carmakers to take serious note – as Ted Agata says, chase the customer not the costs.