Although
today’s global auto industry contains fewer major players, it faces unprecedented
growth that can be either a bonanza or a burden, said Toyota USA’s chief executive
at the opening of the 100th annual Chicago Auto Show.
"The auto industry has been shrinking steadily ever since hitting a peak
of 208 companies here in the U.S. during the early part of the 20th century,"
said Toshiaki (Tag) Taguchi, president and CEO of Toyota Motor North America.
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"Today there are only 10 major players around the world when you count
buy-outs, alliances and controlling interests," he added.
Taguchi noted that the tremendous growth of the global automotive fleet in
the years ahead could generate a grave social backlash if the industry does
not handle it properly.
"In 1950, there were about 69 million cars and trucks worldwide,"
he said.
"Today there are more than 10 times as many and each year another 55 million
are added by new production."
Taguchi predicted that the global vehicle population will swell to more than
1.1 billion by 2050.
"This phenomenal growth can be either a bonanza or a burden," he
added.
"If we let it become a burden, the auto industry will face a social backlash
like never before."
He called on the industry to "pay attention to two important Es – the
environment and e-business" to avoid disaster by reducing the industry’s
environmental footprint and removing waste from the supply chain that flows
from raw materials, through manufacturing, to the final customer.
Taguchi said that the need to accomplish these tasks quickly and the great
cost involved are driving the consolidation of the auto industry, but that "only
large companies or partnerships with international reach will have the clout"
to help create the international standards and regulations necessary to deal
with challenges such as global warming.
"If we help create practical international standards," he added,
"they may provide vital economies of scale that will enable us to drive
down product-development costs while still taking care of our customers and
the planet."
Taguchi warned that "automakers, suppliers, energy providers and government"
must join hands to fund the massive investments necessary to quickly develop
even greener drivetrains, fuels and fueling networks.
He noted that more "calculated risks" like Toyota’s hybrid Prius
– which achieves 80 percent better fuel economy while putting out 90 percent
fewer emissions – will be necessary in the future.
"Six billion people share this planet and the days when the auto industry
could just crank out cars without concern for their impact on the environment
are over," he added.
He also said that e-business can help to give the auto industry additional
financial leverage to attack its problems by reducing waste and driving out
cost, but that automakers must use it cleverly to "increase product value
and lower costs faster than our customers can lower our prices."
"The distinction between dot-com companies and ‘old-economy’ companies
is beginning to fade," Taguchi added.
"The convergence of old-economy know-how and new-economy speed is fully
underway as smart companies borrow from both worlds to forge a new, more efficient
business model."
As an example of what Toyota is doing, Taguchi presented the "Monarch"
project being pursued by the automaker’s U.S. sales arm.
"Right now we have 85 acres of parts warehouse space around the U.S.,"
he said. "This huge space contains 19 million parts and every day we ship
$US6.6 million worth to our dealers.
"All those parts mean nothing to our customers unless we can get the right
part to the right place at the right time for their vehicle."
He explained that the Monarch project will use high-speed web-based networks
to slash the current day’s supply of total parts inventory by 50 percent, cut
average days of backorders by 30 percent and reduce transportation costs by
25 percent.
"Through better forecasting, inventory deployment and improved procedures,
we will decrease costs and provide better value and service to our customers,"
he added.
Taguchi ended his remarks saying, "I firmly believe that, by working together,
approaching environmental challenges as opportunities and fully developing our
e-commerce abilities, (automakers) will not only drive the future, but thrive
in it."
