Toyota, profits and soul-mobiles
Our writer jousts at a Japanese windmill…
By Alex Ricciuti
I was once watching a cooking show on TV5, the global French language network, and there was Gerard Depardieu in his country kitchen being interviewed about his love of food (I concur, although my preferred cuisine is Italian). When asked about fast food, a look of disgust came over his face. “It has no soul,” he said. Food has to be made with love, affection, craft and an appreciation for tradition, to paraphrase what he said.
Craftsmanship and an artisan’s expertise is essential. It is what I look for in any product that I buy, be it food or shoes or automobiles. I may be obsessive about this point but professionalism and being good at what you do is what I admire most in people. Not success, not power, not money – but simply being good at your job. The cab driver who has the whole city mapped out in his mind’s eye, the chef who doesn’t need to measure anything to get the recipe perfect, the system administrator that e-mails you back in 3 minutes with a simple,”Fixed it.”
Critics of globalization accuse corporations of putting profits before people. I accuse them of putting profits before product. Which brings us to Toyota’s latest earnings.
I’ve written this before but it can be stated again: Toyota is the most successful corporation in history and the latest news continues to confirm this. Toyota’s second quarter results brought it a record profit of 4.13 billion dollars (US). Sales rose 16 percent globally. The company is valued at 214 billion (US), more than 11 times that of GM. This year Toyota will surpass GM in total sales to be the largest automaker in the world.
You can’t argue with that success. But I will.
I wrote above about how I accuse companies of putting profits over product. Am I accusing Toyota of making bad cars? No. Do they make boring, soul-less cars? Yes. But isn’t it great for consumers that they make the best quality cars that rarely break down? Yes. So what’s the problem? I didn’t say there was a problem. Am I asking and answering my own questions like Donald Rumsfeld? Yes. Is it annoying? Yes.
Here’s my theory on Toyota: They deliberately make boring cars. Why? Predictability in their famous/infamous production system.
Take the Toyota Camry, which has more or less been the best-selling passenger car in the US market for the last 10 years. Toyota sells about 400,000 of them a year. It’s consistent. They know they will sell about that many in 2008, in 2009 etc. Regardless of where they are in the model cycle because the model doesn’t change that much. The styling is always pretty much the same. The customer never knows where you are in the cycle. They don’t say,”Well, it’s 5 years old and due for a face-lift. I’ll wait until the new model comes out next year or go buy a Chevy instead.”
Knowing how many cars you will sell is knowing exactly how many cars to build and that kind of predictability gives you great advantages in your manufacturing process and ability to control costs.
Most other automakers have to deal with the unruly aspects of production and sales. You just came out with a new model, and it’s hot and trendy; great news. So you ramp up production, start paying overtime and your factory is running at near capacity, which is good. But the overtime pay isn’t. Then 3 years into the model, it’s not so hot anymore. You have to draw down production, lay people off, creating problems with the unions, and run a production plant at far less than capacity which creates costs. Then you update the model with a whole new design, which requires a big investment,. You have to ramp up production again, re-hire, etc. This all creates costs and costs that are less than definable.
Toyota doesn’t want to build the next Mini or the next 500. They don’t care about those successful models because they know how many Auris or Aygo or Yaris cars they will build for Europe and how many Camrys or Tundras they will need for the US market. That’s what they need to be profitable.
Toyota focuses on quality, which gets them the customers who see an automobile most like a reliable appliance. Toyota, as a company, is geared towards satisfying those types of consumers because their appeal is rational – we build quality cars – and rationality will give you predictability. If you build cool, trendy cars, then the trend will end and you won’t be cool some day 5 years down the line. Then what? You’re on a treadmill always trying to come up with a cool product that will draw consumers who buy a car just because they like the way it looks.
So is that a criticism of Toyota? Certainly not from a business perspective. But the driver in me wants a car to have character. I like automakers whose engineers create a car that really thrills the driver while also delivering on quality and practicality. A car that isn’t just about process – delivering quality and comfort. A car that has it’s own identity and not one created by marketers. A car that someone cared to make.
Alex Ricciuti is a freelance writer and automotive journalist based in Zurich, Switzerland. He writes frequently for Automotive News Europe.
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