bitkahuna

iTrader: (20)

well let me try another approach to prove you totally wrong.

car prices in the past 20 years have dropped MASSIVELY, i'd say 50% or more, when you look at what you get today compared to then.

i remember looking at a 1993 (i think) Supra (when it was new) and the sticker was $46K. my 1994 Acura Legend GS sedan was around $40K new.

even taking just 2% inflation (ridiculously low given what happened in the 80s), those prices today would be $77000 and $67000 respectively.

today for massively less than the legend price i can get a lexus GS350 which is better in a MILLION ways, performance, economy, safety, luxury, quality, everything. for $77k i can almost get a GT-R which is WAY better than a 1993 Supra.

so prices have been coming down dramatically ANYWAY.

my first car, a new 1983 Honda Prelude, was $13K. that would be $22k today using 2% inflation. i can get a LOT of vehicles way better than that old carburetor based Prelude for that!

madoka

Look, it took 20+ YEARS to do that? Can't you see how horribly misplaced your analogy is?

Okay, it me try to simpify what happened:

1. I8ABMR said "You cant produce a parts for 30-40% less and expect the same quality and reliability." This decrease is supposed to happen in the next THREE YEARS.

2. You claimed it was possible and used tech examples (BR and PC) as proof.

3. I pointed out how inappropriate your analogy works, because tech moves light speeds faster than the auto industry.

4. You maintain that it's still reasonable since cars prices dropped some 50% in TWENTY YEARS. BTW, inflation calculators show that your examples are off. A $46K 1993 Supra would go for $68K in today's dollars and not $77K.

Do you see the problem now? By your own admission (even though your numbers are significantly wrong), it took 20 years to decrease prices 50%. Now how is Toyota supposed to decreases prices 30% in THREE YEARS without making sacrifices in part quality again?

I8ABMR

I think you are addressing the wrong member. You quoted bitkahuna. I dont know what you are talking about. Are you posting drunk ( little too much egg nog???? you too??) merry Christmas!!

-J-P-L-

Good points.

I've always recognized these trends while many [auto ignorant] people continually complain about car prices.

Car prices barely keep up with inflation for the most part but every redesign yields a better car in just about every way, again for the most part (although some people may not agree with changes). You get more safety advances, more tech features like navi, satellite radio, backup cameras, ect. nevermind when comparing what is now the norm to cars of 20 years ago. Power heated seats are becoming standard for example. Car's are faster, yet more efficient. They handle way better. Interiors are far more refined.

This is all an example of how automakers continually enhance their manufacturing processes to always offer more while maintaining the same price points.

Each year is a better year to buy a car.

spwolf

warranty and reputation costs are big factors when it comes to lowering quality as well... there is a reason this new initiative has Quality as starting point.

pagemaster

I disagree.

Certain parts will decrease in manufacturing cost as time goes by. A part like a Xenon lamps are very affordable today on cars such as the Toyota Avalon. When Xenon lamps first came on the market back in the 90's with BMW's and Merc they were pretty pricey.

Another part would be suspension components such as Adaptive Variable Suspension. Currently the Toyota Sequoia uses the 98-07 LX470 TEMS suspension system while the new LX570 uses the new generation II system.

The biggest mainstream tech thing I am seeing in lower end cars is the use of projector beam headlamps...cars like the Mazda 3 are now using as well as Camry's and such.

Using blu ray player is the wrong analogy. Blu ray players are just fancy Dvd players, but they still use the basic set up of the standard DVD player. Most of the technology in a blu ray has been around for a while.

The price decrease over time of a standard DVD or a VHS player is a better comparison.

bitkahuna

iTrader: (20)

we can go round and round on this. for example, how much do you think toyota has reduced costs on a hybrid power train from the first one they put out? i bet massively, and only in a few years.

how about airbags? when they first came out they were new and very expensive. now they're a dime a dozen.

regardless, toyota has set a goal, and a goal doesn't guarantee success.
let's wish that they ARE successful because that's good for competition and good for consumers.

madoka

Seriously, if people are going to respond, I would really appreciate if you guys read the thread beforehand. I think many of these "disagreements" wouldn't be there if you bothered reading what was previously said. Like when I stated, "Look, I'm not saying that gradual decreases won't happen over time. I am simply pointing out that the computer/tech analogy is not applicable to the auto industry. It's just common sense."

Again, as much as you guys can't seem to get it in your heads, no where did I say decreases will not happen. The question is solely whether it's going to happen as fast as Toyota wants it to happen which is 30% in the next three years. It's this position that is laughable. If it's so easy why hasn't any other manufacturer in the past several decades suddenly decided they were also going to cut 30% of their cost in three years time. It's because you can't do it. Not even GM was foolish enough to try for that much, that fast in the 80s and 90s. If Toyota goes ahead with their plan we are going to see a drop off in quality and reliabliity. To think that just because the computer industry is able to do it, that Toyota should also, is simply absurd.

As autoblog put it:

"Japan's Asahi business daily revealed a Toyota initiative to lower its parts expenses by 30% over the next three years, and it is one that we're all too familiar with: Toyota told its suppliers to cut their prices by 30-40%. Can anyone guess how suppliers will most likely remove one-third the cost of their parts? If you said "use cheaper materials," we have your prize backstage..."

Or as the truthaboutcars put it:

"Parts suppliers in Japan had near death experiences when they opened their Nikkei this morning. Parts suppliers in China and the rest of the world suffered heart and respiratory problems when the news of Toyota’s latest plan hit the news-wires.

In search of money to save, Toyota plans to slash its parts procurement expenses by 30 percent over the next three years.

Toyota told parts manufacturers to cut prices for auto parts to be used in cars that will be released in and after 2013. The cuts affect more than 200 power train, body and chassis components.

This is easier said than done. Parts sold to OEMs are typically made at razor-thin margins. There is only one way to come close to the cost reductions planned: Make the parts from less expensive materials, and dispense with the really expensive parts,

In that vein, Toyota spokesman Takanori Yokoi said the automaker had made “various suggestions including cost reductions” to suppliers, says Reuters. Toyota plans to overhaul its car designs to help cut costs.

This can only mean one thing: The previously vaunted Toyota reliability, which already started to suffer a while ago, will go further down the drain. The reliability problems were one of the results of a cost-cutting campaign by Toyota that started in 2006.

The news was received with “Hurrah!” on the top floor of the Volkswagen-Hochhaus in Wolfsburg. VW wants to dethrone Toyota by 2018. The cuts in quality will play right into the hands of Volkswagen. They had to contend with their own quality problems ,and had stomach convulsions whenever a German J.D. Power study came out with Toyota on top, and VW down below mediocre."

You guys can keep your heads in the ground and believe that everything is going to be swell after cutting 30% of the part cost, but most everybody else has already figured out what's bound to happen.

pagemaster

I think it can be done. The question is whether Toyota will simply use much cheaper parts or will they engineer parts of the same quality for a lot less? .

Who says GM didn't do it?


Below is a perfect example of cost cutting that adds value or a benefit

1998-2005 Land Cruiser with two piece headlamp and amber lamp


2006-2007 Land Cruiser with one piece headlamp


There is so much more cost savings for Toyota and the part supplier by designing a one piece unit. Is reliability compromised? Likely not, is cheaper to manufacture, ship and install...yes...and is Toyota saving money with this headlamps design...you better believe it or they wouldn't of done it.


The article does state that Toyota wants 30% cost reduction on about 200 parts that will be used in new 2013 models....essentially Toyota is saying, design a part that costs less, I am sure reliabilty will not be compromised.


Below is another example of Toyota cutting costs that also adds benefit.

new process reduces machining costs by a staggering 50 percent

Toyota's money crunchers must have done back flips when
The real beginnings to the 3.5-litre engine available in many Toyota products.
this into context, Toyota has not only managed to halve the cost of its most popular six-cylinder engine, but the very fact this same engine is used in so many vehicles will, through economies of scale, increase Toyota's profitability overall

http://www.automobile.com/industry-r...ge-margin.html


Personally I don't think cost cutting is the issue for Toyota. It is there over capacity and too many overlapping models, this is what is really sucking the profits out of Toyota

(Cj)

Great points and info.

I agree that Toyota needs to streamline their products. Not just here in the US but globally. They have too many different overlapping SUVs such as 4runner, landcruiser, prado, FJ, and sequoia. They only need one or two different body on frame SUVs to sell globally.

Toyota also has 4 or 5 different FF midsized sedans they sell globally that can all be consolidated into one or two global models. Same goes for compact sedans etc.

Lexus on the other hand needs to add more models at various price ranges. I do admit there is some overlap but no where near as bad as Toyota.

pagemaster

You make some valid observations. Toyota historically makes cars for specific regions. Toyota has been trying for the last decade to get the North American design and research program up and running full speed. To date, I think it is a mixed bag whether it is a success, I believe the 2nd gen Tundra, 2nd Gen Sequioa and current Avalon are the only vehicles to be designed in the US and for the US.

I don't have much problem with the 4runner, FJ and GX as they are all built off the Prado platform from Japan, where I have issue is the Sequioa and Land Cruiser...Same with the Tundra, for the Tundra to be successful IMO, the technical components like chassis should be integrated with Toyota Trucks worldwide. Kind of like how the Hillux Truck and the Tacoma are related but not the same.

Pretty much all engines for North American build vehicles are now made in the USA.

I agree, Lexus seriously needs to build the ES in North America. They were VERY late in the entry lexel hybrid. Also, IMO Lexus needs a SUV that is lower priced than the RX, something like a Rav4 Lexus. Whatever happened to the Lexus JX or whatever it was going to be called?

As for Toyota, same thing with the Prius, but I think they will be moving production of the Prius to North America sometime soon.

(Cj)

Eventhough vehicles like the 4runner, FJ, and Prado are all built on the same platform there's still cost in having separate development and design teams for each vehicle. If the Prado replaced the 4runner and FJ Toyota could save anywhere from 30-60% in devepment cost for the vehicle. 1 devepment team instead of 3. They could do the same with their sedans also.

Honda already sells a lot of their products globally like the Civic for example. They currently sell two different midsize sedans but with the economic collapse they are now considering having only one Accord sedan globally. Moves like this are perfect for saving money without cutting quality.

I'm not saying Toyota should have the exact same lineup everywhere either. Like Lexus Toyota should have a few core products they sell everywhere and then one or two market specific products (ie ES and HS).

lexusscturbo

iTrader: (12)

I'd say look at the process for use CF in Aerospace, just use a cheaper grade since delam's and quality of the cloth itself is not as important, and we'll have a winnAR!

J.P.

Not sure where you get that information from but the big three have been doing that for well over 20 years. They have sent SQE’s, SPE’s,Engineers, IE’s and Supply Chain Analysts out to work with suppliers for as long as I can remember. One major flaw in is this they are part price focused, and businesses NEED to make money. You reduce the part prices by so much, your also lowering margins. What happens when you have a quality issue and the parts must be double sorted or even visually inspected? When a company loses money on that part they look for other ways to cut expenses and save money.

If Ford came out to your site and helped you save 20% on the COGS they wanted the whole 20% off the part!


All of the “we will help you stuff” sounds great but in reality they push margins so low, it hurts the suppliers.


As far as the “gun to the suppliers head” part, that is true. For a good 5 year run they would sit in a big board room looking at net present values while arbitrarily saying “we want a 5% price reduction” year over year. Not once did they even care about the fluctuating raw material costs and even when the price of steel just about double, they still wanted their 5% off, and you wonder why you got back parts?

IS-SV

It is not Toyota's problem to maintain the high margins of parts manufacturers. If the suppliers sell only low margin commidity-type products, then they need to structure their entire business accordingly, similar to how flash memory manufacturers deal with margins in the high teens.

Again I'm not worried about it (at Toyota), being familiar with manufacturing controls on quality.