Toyota Warms Up Its Buyers and Readys Strategic Alliances For the Autonomous Vehicle Evolution
“Companies that want to have a successful, long-term future need to get key strategic decisions right in the next decade.” – from The road to 2020 and beyond: What’s driving the global automotive industry?, a report by McKinsey & Company.
The automotive industry insists there is evidence indicating that the industries future opportunities will outweigh the initial challenges. But it’s as tricky as the housing economy to predict who, what, when, where and how the inevitable evolution will take place. Taking the wrong path could bring even major players to their knees.
Let’s take a look at Toyota’s strategy for remaining relevant in the future and see what we might glean from some of its moves:
In the automotive world, OEMs have to develop alternative powertrain technologies without knowing what will end up being the prevailing technology of the future. But keep in mind that conventional internal combustion engines (ICEs) will still account for more than 90 percent of cars sold in 2020. Toyota isn’t taking risk in the half-ton truck segment. While Ford will offer six engines in the line-up for 2020 Ford F-150s and RAM follows suit with four different engines, each available in two- or four-wheel-drive on the Ram 1500, there’s only one engine option for 2020 Toyota Tundras the 5.7L i-FORCE V8. Every trim level will tout towing capacity right around 10,000 pounds—not category-leading, but still descent. Toyota appears to be keeping its toe in the pick-up market (maybe due to its Texas connection), but it isn’t putting up a big fight to win the market in this segment.
This is not to say that Toyota isn’t keeping up with advanced engine technology; they just choose where to focus it. Total Toyota division hybrid sales, in fact, had increased 68.4 percent in 2019 per the latest reports. The Corolla sedan, new from the ground up for 2020, offers an available hybrid for the first time in the U.S. With 46 million units sold globally since Toyota Corolla’s introduction in 1966, Toyota is once again taking a stance for sedans rather than putting them on the shelf like several other OEMs have done. Toyota shook up the midsize sedan ranks with the new-generation Camry, and now the compact sedan segment is in for a jolt with the 2020 Corolla sedan, redesigned from the ground up based on Toyota New Global Architecture (TNGA), bringing together new approaches to engineering, design, assembly, and materials.
It’s difficult for OEMs to differentiate themselves as new features quickly become mainstream. Toyota was one of the first to announce that its Safety Sense-Pedestrian (TSS-P) active safety system would be standard on all models and grades. It includes Pre-Collision System with Pedestrian Detection function, Lane Departure Alert, Dynamic Radar Cruise Control, and Automatic High Beams. Including what used to be optional equipment across the entire line-up from entry level cars to full size trucks isn’t just a sales tool, it’s prepping for the autonomous car future.
Stats say commuter vehicles and drone connectivity will be the force behind future vehicle sales. Legislation is the main roadblock to autonomous driving, with accident liability as the most pressing legal issue. The advance of CASE (connected, autonomous, shared, electric) vehicles will inevitably mean fewer accidents, fewer traffic deaths, greater energy efficiency, and lower insurance premiums, says an article on kearney.com. This could be an opportunity for OEMs if they can figure out how to make money out of the deal. The AtKearney article suggests that revenues from pay-per-use services will soon outperform optional equipment revenues.
The futurists say there will be two pathways to success in the era of autonomous driving. One will be mobility as a service; it doesn’t matter so much what vehicle you’re in if you don’t own it or you’re sharing the use of it; it will be all about reliability and best solutions. On the other end will be lavish private transportation, where speed and power will take a back seat to the cabin experience. For example, Damlier has a self-driving concept car on the streets in San Francisco with four swiveling lounge chairs. Toyota and other manufacturers appear to be warming the luxury vehicle market up with special edition trim levels and off-road capable vehicles most often reporting more sales than entry level options.
AtKearney predicts that premium OEMs developing their own intelligent cars. Middle-class OEMs are in trouble, it warns, as they will struggle to find a value proposition or key selling point in this scenario. Winning will be all about having synergistic alliances with other companies. Late last year, Toyota revealed a new program to license its Intellectual Property to interested parties. The Toyota IP Solutions program is intended to help promote and serve as an access point for the licensing of patents—another brilliant revenue stream for Toyota and a move that could lead to the alliance that holds the key to the future of mobility.
Download a copy of this article from Building Savvy magazine.
