When it comes to maximizing revenue, reducing costs is key. It can be done in a few ways, but it takes smart thinking to do it without hurting workers and lowering the quality of the product. That’s something Kenta Kon, Toyota’s newly appointed CEO, is working on. Toyota is far from financial trouble, but between developing lower-volume performance cars and competition from Chinese brands, profit margins have dropped, and that doesn’t please shareholders.
However, don’t expect Toyota to suddenly lay off workers or sell its customers short. Instead, it’s approaching the problem in the Toyota way.
Streamlining The Process, Toyota Style
Toyota UK circular factory, recyling parts for new Corolla assembly.Toyota UK
It takes a cool head to not panic and start cutting costs with workers or cutting corners with production. Instead, Kon is looking to prevent profits from sliding by balancing the situation. Speaking to Automotive News, Kon said, “We’re not thinking the lower the breakeven volume, the better. There will be a certain level that allows us to keep operating suppliers even in very difficult situations.”
Toyota has spent decades working up its supply chain and suppliers, and cutting even one would upset the balance and production level and see a lot of people lose their jobs. By the sound of it, Kon is preparing for things to get worse while maintaining Toyota’s edge. That includes cutting waste and reducing parts types and variety – in other words, simplifying parts and using fewer variations throughout the model range.
It also includes trusting staff to make the right decisions and giving them the authority to make changes. “People in certain areas already have this awareness of what needs improvement,” Kon said. “But there might be mechanisms that hinder it. I support them to clear those obstacles.”
According to the Automotive News report, Toyota is already working with seat supplier Toyota Boshoku to cut the number of part types by 33%. Toyota Boshoku said it has already slashed headrest component types by 76%. Using the 2026 Toyota RAV4 redesign, Toyota said it has reduced the parts variety in door handles by around a third and in outer mirrors by half.
Is Kenta Kon The Right Person At The Right Time?
Toyota President CEO Kenta KonToyota
Kon has moved into Toyota’s CEO role at a tough time for any business, let alone the automotive world. He was the right-hand man to Akio Toyoda when Toyota saw its first loss as the 2009 financial crisis reared its head. Cost management became key. Kon’s approach to financial discipline has become Toyota’s best practice, and now he’s in charge as the world shifts both economically and politically.
“They were very, very tough times for Toyota,” Kon explained. “We had to stop multiple projects, focus on cutting costs, reduce capital expenditure and discontinue some future investments.” Up until 2024, Toyota was on a good run, but Toyota’s operating profit has slid for two consecutive years.
CarBuzz Insight – Why This Matters:
First Camry To Come From Toyota Kentucky Plant 1988Toyota
The obvious danger of reducing costs is a lesser product, which is something Toyota can’t afford to tarnish its reputation with anymore. The approach appears to be cutting the cost of parts that customers won’t see, such as seat and door mechanisms, and using the same parts in as many models as possible. That is great if those mechanisms are as reliable as people expect from Toyota.
The good news is that Toyota has been refining its supply chain and manufacturing processes for decades, and Kon is playing to that strength rather than being reactive and making drastic moves from a short-term perspective.
Source: Automotive News
