Toyota Wants Suppliers To Cut Costs By 30%

December 23, 2009
Toyota logo

Toyota logo

Toyota’s stellar profitability record took a major beating this year thanks to the affects of the global financial crisis and in response the automaker is looking to cut costs at every possible point.

The savings will come from improved quality, reduced waste and human resources development, but mostly from reduced costs from suppliers.

According to latest reports, Toyota wants a reduction in the price of its parts by as much as 30% over the next three years in an effort to return to profitability. Toyota has asked its suppliers to cut prices of some parts by 30-40% for cars that are set to go on sale by 2013, reports the Asahi daily. Furthermore, the Nikkei business daily is also reporting that Toyota plans to switch to less expensive materials and parts.

The only official word from the automaker is that it has made various suggestions to suppliers, which included cost reductions.

The need for cost cutting is growing as new environmental and safety standards push new-car requirements ever higher while parts costs climb and consumers move toward smaller (and hence lower-margin) cars.

Interestingly, Toyota has forecast a second operating loss for the next financial year.



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