Toyota to Shift Half its Vehicles to New Platforms by 2020

Toyota Motor Corp. will shift half of all the vehicles it makes to new cost-saving platforms by 2020, following a similar move by rival Volkswagen AG.

By moving to the new underpinnings and more use of common components, Toyota will reduce development costs by at least 20 percent, Executive Vice President Mitsuhisa Kato said Thursday in Toyota City, Japan, where the company is based. The initiative, called Toyota New Global Architecture, follows a strategy Volkswagen began to implement in 2012.

The world’s biggest carmakers are promising far-reaching benefits, including lower costs and higher productivity, by designing more new models with fewer platforms. They’re also counting on the strategy to free up resources to develop cars that are lighter, more fuel-efficient and packed with new technology.

“Sudden and drastic changes in the business environment mean that conventional ways of thinking and doing business can no longer help us grow sustainably,” Toyota President Akio Toyoda said in a statement. “We are at a crossroads where we must now build a new business model.”

Kato refrained from discussing specific Toyota models, saying only that the first new platform will debut with a mid-size, front-wheel-drive vehicle this year. The company has said previously that the next version of its Prius hybrid, which goes into production this year, would move to the new strategy, known as TNGA.

Next Prius

“How Toyota will make the next Prius using TNGA is extremely important in terms of knowing the future profitability of Toyota,” Koji Endo, an auto analyst at Advanced Research Japan, said by phone before Kato’s comments.

Toyota said the new strategy will result in a more than 25 percent improvement in the fuel efficiency of its powertrains. It will also mean that compared with 2008, the cost of starting new production lines will fall by 50 percent, and initial investment required for a new plant will drop by 40 percent.

The auto industry’s shift to common platforms and shared components hasn’t been without compromises. One likely downside is the proliferation of bigger safety recalls, because a defective part that’s used in a greater number of vehicles will result in more cars needing repairs.

Still, every major automaker is wagering the benefits will far outweigh the drawbacks. Analysts at IHS Automotive predict companies including Toyota and General Motors Co. will cut the number of vehicle platforms they use by more than half by 2021.

Volkswagen Platform

Volkswagen will lead the industry in terms of making the most vehicles from a single architecture during that time, IHS estimates. The Wolfsburg, Germany-based carmaker plans to produce more than 40 different models, including the A3 and the Golf, using a platform it calls MQB.

Volkswagen may build more than 30 million vehicles using the platform from this year through 2021, according to IHS projections.

Toyota may need to execute its strategy without hitches to stay ahead of Volkswagen in global sales. Worldwide deliveries for Toyota climbed 3 percent to 10.23 million vehicles last year. Volkswagen boosted sales by 4.2 percent to 10.14 million.

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