TOKYO - Toyota Motor Corp. is willing to forego the cost savings from buying entire systems, or modules, from suppliers, lest it give up too much control over its operations.
'We don't really want full implementation of modules,' said Taka-aki Jagawa, Toyota's senior managing director for purchasing.
The drive to modularization is remaking the auto industry in Europe and the USA. Partsmakers are merging and buying each other at a feverish pace as they seek to build the capability of delivering modules, and thus to meet carmakers' price cut demands.
In Japan, though, only a handful of parts companies, such as Denso Corp. and Ichikoh Industries Ltd., are considered to have the breadth of product line and management skills needed to deliver entire systems.
A cultural aversion to mergers and acquisitions, as well as relatively limited exposure to the US and European markets, has kept other makers from trying to become systems suppliers.
That's OK with Toyota.
'If all the partsmakers go modular, then for carmakers the parts will all be 1/8black box' ones,' beyond the technical understanding of the carmaker, said Toyota Executive Vice President Iwao Okijima. 'That's not good.'
Said Jagawa: 'We want to do the modules ourselves, in-house, not leave it to a supplier.' Another option, he said, would be for about 10 suppliers to make the parts of a system under the leadership, though not the ownership, of one of the group. 'We're trying to nurture such leaders,' Jagawa said.
He admitted that Toyota will miss out on enormous opportunities for cost savings from single-sourcing a module for vehicles it builds worldwide. 'Cost-wise, currently it's a handicap,' he said.
On the other hand, keeping multiple suppliers for multiple parts will enhance engineering and technical skills over the long term, he argued. 'Which approach is better will be evaluated 10 to 20 years from now,' Jagawa said.