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Monday, June 15, 2009
Toyota will be rolling a new low cost model by early part of the next decade, said to be developed with a target price of between 800,000 to 900,000 yen. Internally code-named as EFC (Emerging Family Car). Initial reports from Japanese business dailies indicate the so-called Emerging market Family Car (EFC) was supposed to be released by 2010. The first EFC prototype was completed in end 2007 but after a test drive by the then president of Toyota Motor Co. Katsuaki Watanabe, engineers were asked to improve various parts of the car further. For now, lets just assume the 2010 launch date as what it is - a rumour.
Information gathered from Toyota Tsusho Corp (trading arm of Toyota Motor Co.) indicate that the new range of global models, including the EFC will increase Toyota's production by more than 500,000 units per year.
The role of the EFC is to boost Toyota's low market presence in new emerging markets, commonly referred to by economists as BRIC (Brazil Russia, India, China) group. In all the BRIC countries - Toyota's market presence in the booming small budget car segment is negligible. The low car car market in these countries is currently dominated by Suzuki (India), domestic brands (India and China), Dacia-Renault (Eastern Europe and Russia) and Volkswagen (China and Brazil). German Tier 1 supplier Bosch predicts that total annual volume of low cost cars (defined by Bosch as cars priced below USD 10,000) will reach 10 million units by 2010, which translates into a 13% market share of the global vehicle sales. It's a large segment that no mainstream car maker can afford to ignore.
When launched, the EFC will be the cheapest Toyota model in the world. Production is being planned for Brazil, India and China. Both sedan and hatchback bodytype are rumoured to be in the plans as China is predominantly sedan market while India's budget cars are mostly hatchbacks. Closer to home in South East Asia - both Indonesia and Vietnam are said to be in running to bid for the rights to assemble the EFC. Indonesia appears to be a favourite on the surface level but Vietnam, with its majority motorcyle owning population might provide a larger domestic passenger car market for the EFC (Indonesian market is predominantly MPVs).
The closest low cost car project Toyota has embarked on was for the Toyota Soluna, pictured above, (precursor to the Vios sedan aka Yaris sedan aka Belta) that was very popular in Thailand.
The EFC will not be as stripped down as a Tata Nano, but will be more similar to a Dacia Logan or Fiat Palio. The industry groups extremely stripped down cars like the Nano as ULCC (ultra low cost car) while the Logan and Palio are LCC (low cost car). Both ULCCs and LCCs target mainly first time car buyers who were previously using motorcycles. Dacia has been one of the smartest acquisition by Renault, keeping the company afloat when most major car markets in the developed world is collapsing. Renault purchased a controlling stake in ailing Romanian car maker Dacia for a sum of USD 50 million. Renault quickly pooled its resources to design a new LCC. The project was codenamed X90. Renault did not just reduce cost by stripping all costly features but also rethinking development and production process of the vehicle. For example, the dashboard of the Logan is a one-piece item to facilitate faster and cheaper molding while the Logan's door panels are flat to maximise use of storage space during transport. More than 1 million Logan and its variations have been sold since 2004. The best thing is that to the surprise of Renault, there is a small market for the Logan even in the developed Western Europe as an additional city car, and these fully specs up versions are sold well above the Logan's initial target price to generate handsome returns for Renault.
In the case of the Logan, manufacturing tools no longer used in Renault's factories in the developed West were refurbished and adapted to build the Logan, thus much of the initial cost were already written off.
Renault-Dacia Logan and all its different bodytype variation.
Fiat Palio (project Fiat 178)
Toyota however has their own quirky way of managing new vehicle / technology development. Most car makers choose to work together with Tier-1 suppliers like Bosch or Continental etc etc. That way, car makers can leverage on the resources and specialized talents of suppliers. Mercedes-Benz for example, partnered with Bosch to pioneer development of electronic stability programme (ESP). Bosch also lead development work of many new diesel engine technology with Volkswagen. Japanese companies however have a mentality of preferring to keep all new development work in house, but even by Japanese standards, Toyota's mentality is considered quite extreme. The logic is that developing technology in house will have a long term strategic interest to the company. Also, it is easier to manage any quality issues / recalls when the company is familiar with a technology developed by itself in-house. But this meant that the car company will lose some market advantage to its competitors who are able to roll out new technology faster. Toyota faced a particularly critical moment in the 1980s in United States when the US Federal government began imposing smog control regulations and catalytic converters are made mandatory. Toyota, being a car maker have almost zero expertise in the chemistry and physics of catalytic processes to breakdown vehicular emissions, but the management of Toyota was adamant of learning about catalytic converters. Honda was able to roll out its CVCC engine which negates the need for a catalytic converter. By almost a stroke of miracle Toyota engineers somehow was able to acquire understanding of the technology by the time smog control regulations came in to force.
But this also means that Japanese car industry is largely an OEM (fancy term for car manufacturers) driven one, unlike European automotive industry which relies on both Tier-1 suppliers and OEMs. As a result, the skills and abilities of Japanese automotive suppliers are very limited to the exposure they obtained from the domestic Japanese market. Denso, Japan's largest automotive parts supplier, for example is still playing catch-up in diesel engine technology mainly due to the low diesel adoption in Japan. Both Bosch and Continental were part of the Tata Nano project. Bosch supplied the starter-alternator system as well as a new Motronic Value engine management, specifically designed for LCCs and ULCCs which utilizes software emulation to reduce those costly sensors. Continental provided the fuel system while Behr designed the HVAC (air-conditioning). French company Valeo provided the clutch sets. There was only one Japanese supplier selected to work on the Nano - Denso, only for the single arm wiper motor and arm.
The Nano project was a very valuable experience for Tier-1 suppliers as it pushed them to rethink many aspects of the car from a ground up. For the EFC, Toyota have once again followed the same tried and tested policy of relying only on themselves. In fact, Toyota engineers were barred from discussing EFC projet with parts suppliers but are to conduct plant visits to review all automotive parts and their production. For Toyota, this is equivalent to the sort of rethinking that Tata Group had to do when they developed the Nano - but Tata Motors have less established practices compared to a giant like Toyota, and thus have less baggage to carry.
Other car makers are not sitting idle. Volkswagen have already announced plans to produce its own version of LCC (codenamed NSF - new small family) in its Bratislava plant in Slovakia by 2011. NSF family are mainly micro city cars, with 3 main different body types including 3 doors, 5 doors and a MPV.
Daewoo (part of GM-DAT) is also rumoured to be working on another LCC model that is said to undercut price of the EFC even further. Daewoo models are sold outside Korea as Chevrolets and is very popular in China. Renault will also replace the current Dacia Logan by 2011, with a model that is said to be even cheaper.
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Posted by AutoIndustrie at 9:10 AM