The abolition of quality controls it sees as too stringent could form part of Toyota’s answer to the threat from high-volume, low-cost competition from China.
The outgoing CEO of Toyota has declared the impact of rising Chinese car brands a "crisis", and has called for the axing of quality controls on tiny components hidden in vehicles that it believes are unnecessarily stringent.
As reported by Automotive News, Koji Sato – who has vacated the CEO position as of today, April 1 – last week addressed a conference of 700 executives from 484 companies that produce parts for Toyota vehicles on the threat its neighbour poses.
“Unless things change, we will not survive,” the executive said. “I want everyone to acknowledge this sense of crisis.”
Sato, who took the role of Toyota CEO in 2023, made the impassioned plea as one of his last duties as CEO at the Japanese automaker, with his replacement, Kenta Kon, officially becoming CEO from today.
Sato highlighted a number of areas where Toyota had room for improvement, and called out recalls and supply hold-ups as sticking points in the production process.
“We continue to keep many customers waiting. Many of these stoppages stemmed from equipment or quality issues at both Toyota and our suppliers,” he said.
Yet one suggested area where Sato said Toyota could cut the time it takes to develop new cars – and reduce costs – is the relaxation of what Toyota sees as excessively stringent quality controls of components from third-party suppliers, Automotive News reports.
The brand’s tight control over parts supply was implemented to ensure accurate assembly and high reliability, but it is now being targeted as a development bottleneck.
Despite this, Sato maintained that general quality must not slide, saying: “To enable us to make more cars, we must step things up a gear in areas such as building quality into every process.”
Any change in Toyota’s quality control would need to be carefully judged, as Chinese brands move towards higher accuracy and reliability in their own vehicles and factories.
Of note, Toyota has rolled out over the past 12 months what it calls ‘Smart Standard Activity’, which has seen it modify its engineering standards to focus on the function of a component over its appearance.
In the past, Toyota has rejected developed components over cosmetic issues, or other aspects where the part performs as it should, but does not meet other visual or design specifications.
Flaws in non-visible trim parts, colour variance in electronic component housings, and burrs or divots in assemblies that aren't touched or seen would cause thousands of components to be rejected.
For example, Toyota would reject steering wheels with "all-but-imperceptible wrinkles", Automotive News reports, and sets standards that see 10,000 vehicle wiring harnesses scrapped each month due to discoloured plastic.
Also among Toyota's cost-cutting measures are new rules around the moulds and tooling that suppliers must keep to produce replacement parts for older vehicles.
The Japanese giant previously required suppliers to keep tooling for a broad array of parts, such as sunvisors with or without a mirror, or "slightly different" door handles in a variety of colours, Automotive News reports.
It now allows its suppliers to consolidate the moulds they keep to the most popular versions, such as stocking the ability to produce a more limited number of door handles, or only the sunvisor with a mirror.
Toyota presented suppliers with over a dozen initiatives to its supply chain aimed at maintaining the brand's sales, scale and profits, while reducing development and production costs.
“Put as many of these ideas into practice as possible and create better cars,” Sato told suppliers.
“We need to improve productivity across the board. Both as individual companies and as an industry, let’s transform how we fight to ensure our survival.”
Incoming CEO Kenta Kon, currently Toyota’s chief financial officer, backed up Sato’s calls, warning that Toyota’s current profitability and production volume – remaining the world's best-selling car maker – are not indicators of the company’s state of health.
“Going by the figures released in our financial results, some may feel that Toyota is in a secure and comfortable position. But that is certainly not the case,” he said.
Kez Casey migrated from behind spare parts counters to writing about cars over ten years ago. Raised by a family of automotive workers, Kez grew up in workshops and panel shops before making the switch to reviews and road tests for The Motor Report, Drive and CarAdvice.
