Toyota Motor Corp. is implementing a new production strategy that entails redesigning its models while reducing manufacturing costs by making certain parts and components more compatible with those used by other automakers. The automaker hopes its Toyota New Global Architecture (TNGA) strategy will help it maintain its global competitive advantage and recover from recent reverses.
The TNGA program is initially focused on the development of new platforms for the mid-sized Camry sedan, the small Corolla sedan and the Prius hybrid, according to a report by research firm IHS. These three vehicle classes account for about half of the company’s global production. Toyota hopes to “cut its capital expenditure on parts procurement by as much as half by 2016,” says IHS.
The primary aim of TNGA is to “improve total saleability to maintain sustainable growth,” Masatoshi Nishimoto, automotive analyst at IHS, told IMT. Saleability encompasses design, driver experience, fuel efficiency, quality and reduction of costs, he said. TNGA is “one of the largest platform/component integrations in the automotive industry,” he said. “It will reach 5 to 6 million units per year at a peak.”
Nishimoto predicts that TNGA will greatly improve the economics of Toyota’s production operations. Sharing components across platforms will allow Toyota to “enjoy more economies of scale,” he said.
“As common components increase, common units will also increase,” he said. “This trend will help Toyota and its suppliers to manage inventory easily, decrease work-in-process and shorten the production process. And it is getting easier to introduce production standards into the global production sites at the same time.”
At a presentation earlier this year, Toyota described several key initiatives it is undertaking to implement TNGA:
1. Enhancing product strength. Starting with 2015 models, Toyota will “redesign cars starting from the frame, adopting lower hoods, lower center of gravity and creating more attractive designs.” It will introduce new platforms to improve functionality in such areas as ride, turning and stopping, and higher performance.
2. Employing grouped development. This will improve quality and efficiency through “the simultaneous planning and development of multiple vehicles based on the pre-determined vehicle architecture,” which is expected to increase development process efficiency by 20 percent to 30 percent. The new process will allow greater use of common components and parts among vehicle lines.
3. Manufacturing reforms. Toyota will seek to streamline manufacturing processes and improve quality through use of parts and components that are simpler and easier to make. This will involve “integrating the operations of suppliers and divisions responsible for part and major component procurement, production engineering and R&D.”
4. Global standardization measures. Instead of adhering always to its own specifications, the company will in some cases source standard parts commonly used by other manufacturers.
5. Procurement strategies. TNGA and its grouped development initiative will enhance Toyota’s ability to purchase bulk-ordered parts “for multiple models across regions and time frames as a result of the use of common parts and major components.”
TNGA is seen as an outgrowth of the ascendancy of Akio Toyoda as president of Toyota Motor Company in 2009, according to an Automotive News report. Toyoda became president in the midst of the global financial crisis, when the company suffered its first operating loss in decades. That was followed the next year by recalls connected with spontaneous acceleration caused by a supposed product defect. Then in 2011, Toyota suffered reverses due to the March earthquake and tsunami, which resulted in a decrease in global production.
Through those years, Toyoda kept his previous board in place. However, earlier this year, he replaced most of the board members and ushered in a new executive team. While introducing the team, Toyoda likened TNGA to a navigational chart for a “voyage on a new vessel to pursue an even better car.”
The Automotive News suggested that TNGA, first introduced by Toyota in 2012, is similar to the modular development strategies being adopted by Volkswagen, Nissan, and other automakers.
Nishimoto disagreed with this comparison. He stressed that Volkswagen’s system “is a module concept, while TNGA is platform/component integration.”
Volkswagen has pioneered the strategy of shared modular development across automobile product lines. Referred to as the MB program (Modularer Baukasten, or modular matrix), VW’s modular toolkit strategy is implemented in two versions, MQB and MLB, “Modularer Querbaukasten” (modular transversal toolkit) and “Modularer Längsbaukasten” (modular longitudinal toolkit), which are variations based on the engine orientation. The strategy aims for reductions in unit costs, capital expenditures, engineering time, weight and emissions. Employing shared modular designs allows different automobile models to use many systems and components in common, and even to be manufactured at the same facilities.
Nishimoto said Toyota has its work cut out for it in its competition with VW. “If you compare TNGA to VW MQB, the first model under TNGA will launch in early 2015, while VW already launched the new model in 2012,” he said. “Toyota will be three years behind VW to introduce the new platform strategy. It is very important for Toyota to survive until then in the global market.”