TOYOTA

Toyota wants to follow Tesla example

Toyota has begun reducing spending, initially with sales and marketing, and diverting resources to research that will help it meet new competitors, four people familiar with the matter said.One of Toyota's first initiatives was to cancel contracts with the Chinese unit of its long-standing advertising and communications agency, Dentsu, according to sources.Toyota chief executive Akio Toyoda and chief financial and risk officer Koji Kobayashi want to follow the example of Tesla, Google and Tencent - all rely heavily on less traditional, cheaper and innovative marketing strategies.They argue that economies must be converted into investment in emerging technologies, including autonomous vehicles."We can record record profits, but we do not think we're keeping pace with them," one senior Toyota source told Reuters.To that end, Kobayashi wants to use the resources previously earmarked for automotive marketing and overheads, which in the year ended March totaled ¥ 2.72 trillion ($ 24.66 billion).
Toyota reported operating income of 2.4 trillion ($ 21.68 billion) in the same period, making it one of the most profitable automakers in the world. The company's profit margin is around 9%.
But companies like Google and Apple - now competing directly with Toyota in automotive technology - have much larger numbers.
Toyoda and Kobayashi see a sharp contrast between the hyper-efficient side of Toyota's factories and sales operations, according to sources who asked not to be identified because they were not authorized to speak to the media about the issue.
The decision to exclude China's Dentsu from new business with the automaker next year and reduce already-approved projects shows just how serious Toyota's efforts to cut spending are, the sources said. Dentsu in Beijing provides about $ 50 million to Toyota annually.


reuters.com