Toyota Motor to revamp Toyota Group supplier network

Article by Christian A., on December 12, 2014

Toyota Motor Corp. is revamping its Toyota Group supplier network as it bids to provide a better support for its next generation product platform as well as develop advanced active safety systems. Toyota said the revamp is aimed at improved efficiencies at suppliers Denso Corp., Aisin Seiki Co. and Toyota Industries Corp. and has a goal of consolidating product r&d and production.

Toyota Motor added that the revamp will focus resources “under one roof” and will allow the carmaker to concentrate on developing next-generation technologies. The revamp will be implemented in three key shifts. For instance, Aisin Seiki, Denso and Sumitomo Electric Industries Ltd. will consolidate their brake businesses under Advics Co., a brake-maker they established in 2001.

Advics will set up a site in 2016 and will be in charge of the engineering, manufacturing and sales of the Toyota Group’s brake systems. On the other hand, the development and production of manual transmissions will be shifted to Aisin Seiki unit Aisin AI Co. starting around 2016.

Likewise, diesel engine development and production will be shifted to Toyota Industries, allowing Toyota Motor to “further concentrate on the development of cutting-edge base technologies and next-generation powertrain components.”

The move by Toyota to streamline its family of closely held suppliers – called keiretsu – comes at a critical time when these companies face challenges are being required to produce millions of identical parts. The streamlining of its suppliers will allow Toyota Motor to focus its own r&d budget to new technologies, while helping them remain competitive with higher volume and capacity utilization.

Toyota has seen its global sales lead trimmed by Volkswagen Group in the first nine months of 2014. This essentially means that the battle for the throne as the No. 1 carmaker in the world would be close in the last quarter of the year. As per calculations by Bloomberg News based on company announcements, Toyota’s lead against VW Group after nine months of the year is around 72,000 vehicles, compared to 227,000 a year earlier.

Toyota's overall deliveries in the first three quarters of 2014 jumped 2.8 percent to 7.62 million vehicles. On the other hand, Volkswagen’s total sales leaped 5 percent in the same period to around 7.54 million cars and trucks. The two global carmakers are benefitting from different markets: the US for Toyota and China for Volkswagen. Both carmakers are expecting to sell more than 10 million vehicles this year.

Based in Toyota City, Japan, Toyota Motor Corp. is a multinational auto company that is considered as one of the largest in the world. It was started in 1933 by Kiichiro Toyoda as a division of Toyoda Automatic Loom Works. In August 1937, Kiichiro’s division was spun off from Toyoda Automatic Loom Works as an independent and separate company.

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