Toyota Takes Europe—By Design
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Tokuo Fukuichi, president of Toyota's European design center, is looking nervous. Sitting in a plush meeting room in the Japanese carmaker's flagship showroom on the Champs-Elysées in Paris, the 55-year-old Fukuichi is about to outline his strategy for Toyota (TM) design in Europe—in the first comprehensive interview the company has given on the subject.
He faces a tough challenge. Toyota may be the leader in its home market, with some 40% of all sales, but it's relative small fry in Europe. Just 5.5% of cars sold in this market are Toyotas, compared with Volkswagen's 19.2% and Renault's 8.7%, according to the latest figures from ACEA.
Of course part of the reason is that Toyota has been a presence in Europe for less than half the time of its competitors. But Fukuichi admits that his company has also been held back by weak design. "We have been much more daring in our home market than here," he says.
The auto maker realizes that in order to compete, it needs to rev up its design game. Six years ago, it opened ED≤, its European Design & Development center at Sofia Antipolis, near Nice in Southern France. Its aim: to produce cars that appeal emotionally to design-conscious European buyers and meet their specific needs.
At ED², a team of 35 designers and strategists from nine countries works on making cars that strike a chord with drivers in countries where gas is more expensive than in the U.S., parking spaces are harder to find, and streets are narrower. "Our work is also influenced by Europe's politics, its social ambitions, its daily routines, and even its pets," explains Laurent Bouzige, 28, the only French designer on the team.
ED² struck gold on its first try. The Yaris, a compact yet spacious economy auto, was voted car of the year in Europe and Japan in 2000 by leading auto magazines, and in 2005, Toyota launched the second-generation Yaris.
ED²'s team also produces concept cars that let designers show off their wildest visions. One of these is the Compact Sports & Specialty (CS&S) roadster, revealed in 2003. The open-top car features a gadget called Toyota Space Touch, which allows the driver to select functions such as air conditioning using projected holograms.
But no matter how off the wall the designs get, ED² is careful to stick to Toyota's design mantra of "Vibrant Clarity." The phrase expresses the company's energy and vitality, coupled with its more rational, environmentally friendly vision. Despite its gas-guzzling appearance, the CS&S uses Toyota's Hybrid Synergy Drive—an electric motor drives the front wheels, and a gas engine combines with the electric motor to drive the rear.
So far, the strategy seems to be working. ED²'s latest product—the funky about-towner Aygo—helped push unit sales (including the Lexus) up 5.3% between January and May this year. For fiscal year 2006, ended Mar. 31, net revenues in Europe increased 10%.
In an interview with BusinessWeek.com contributor Rachel Tiplady in Paris, Fukuichi and Bouzige discussed where Toyota might go next. Edited excerpts follow:
What brought you to Toyota, and what do you feel are the company's strengths?
Fukuichi: In Japan, your university professor often helps you find your first job. When I finished art school in 1974, Toyota wasn't everyone's dream employer. Most people wanted to work for Honda (HMC). So when, at the end of the course, he asked the class: "Is anyone interested in Toyota?", nobody put up their hand.
But that was the era of the first-generation Seneca, and I loved the look of that car, so I thought: "Why not?" That was 32 years ago. It's a classic Toyota story—many people join the family and stay a lifetime.
What's the setup at ED²?
Bouzige: A core group of 16 designers is divided into three teams: interior design; exterior design; and color and materials. Many designers change departments for each new project. The idea is that each designer knows how each specialty relates to the others so they have a holistic knowledge of the design process.
Is it difficult to design cars that both appeal to European consumers and reflect Toyota's Japanese roots?
Fukuichi: We have a handful of Japanese designers based at Sofia Antipolis who are partly there to help us stick to the company's J-Factor design philosophy. This, along with Vibrant Clarity, is Toyota's design DNA in one word. It refers to the four key aspects of car design: Proportions [which must be optimized], Architecture [which is always pure], Surface [which expresses emotion] and Something Special [the design elements that make a car stand out from the crowd].
At ED², we try to create cars that appeal to Europeans but also retain a strong Japanese flavor in terms of shape and aesthetics. But some design features that are tremendously popular in Japan wouldn't work here.
For example, Europeans like a nice heavy door—it provides a sensation of quality. But the Japanese prefer a thin door that leaves more space inside the car. Also, the size of cars has to be different. In Europe, for parallel parking, etc., the car mustn't be too long, but you can go for a lot of width. In Japan, because of the small garages, the car's width mustn't exceed [5.2 ft.].
Toyota isn't famous for its interiors, which don't measure up to those of most European carmakers. Will that be a focus for you in the coming years?
Fukuichi: Yes, it will. You're absolutely right. A while back, Toyota's interiors were very conservative, too conservative for European consumers. So now we are entirely rethinking our interiors by studying what Europeans want, not only in terms of aesthetics but also safety.
We're investing a lot of energy in developing attractive, dynamic, but user-friendly interiors. We are studying, for instance, the optimum distance between the driver's eye and the dashboard in terms of comfort and safety. Also, we're rethinking how we position instruments on the dashboard—how the speedometer relates to less important information like, say, the clock.
The head of Toyota Germany recently told BusinessWeek that Toyota trails BMW badly in so-called "emotional" design. Is addressing this problem a priority for you?
Fukuichi: It depends on what type of car you're talking about. For SUVs, which is a new, high-growth segment for Europeans, they have quite conservative taste. But when it comes to sedans, they want more daring styles. European carmakers are a constant source of inspiration. Especially because the Japanese approach is often more pragmatic.
How does ED² work within Toyota's global design organization? Does your team collaborate with design centers in other countries? Do teams compete against each other to design a car?
Fukuichi: Our teams in Europe, North America, and Asia often work simultaneously on a project, competing with each other to produce the best design. The Aygo and the Yaris, for example, grew out of competitions. They ended up being designed out of the European center.
Bouzige: ED² is a platform for information to feed Toyota's European designs, but also designs around the world. We share the information with the entire company. For three months of the year the designers have some downtime with work, so we travel throughout Europe to gather information about trends and wider sociological tidbits from all kinds of places.
We go to a lot of trade fairs in London, Sweden, Copenhagen, Milan, on anything from furniture and graphic design, through aeronautics and clocks all the way to dog shows. Yes, dogs. There are six million in France alone—we need to understand how they fit into our customer's lives and demands.
Some say the Audi A8 is the ultimate luxury sedan. Do you see that car as a role model? Renault is also a real design innovator—take the Megane. Does Toyota have to compete in that space to succeed in Europe?
Fukuichi: All these models are fascinating and stimulating for Toyota. I don't like to comment on the work of others, but what I can say is that I feel that each of these carmakers is true to its own philosophy and style.
Korean and other Asian auto makers are also ramping up in Europe—Kia and Honda now have design centers in Frankfurt. How do you see that competition developing? What will set one auto maker apart from the others?
Fukuichi: They are a threat. They've been producing good quality cars for some time, and now they are focusing more and more on design. In fact, the threat from the Korean carmakers is one of the main reasons why we came up with the J-Factor strategy—in order to distinguish ourselves. But still, I think that many European consumers don't yet know or don't yet care about the difference between Korean and Japanese companies. That's what we hope to change.