Toyota to Hyundaify while Hyundia Toyotafies

Toyota just announced that they wanted to cut their supplier costs by 30% over the next three years.

Which means they told their suppliers to cut their prices by 30%...

Which means means that the suppliers, already notoriously efficient, will cut costs the only possible way: lowering quality. Or at least, that is where some of the savings will come from, because 30% is a big cut to reach on efficiency gains...

The result? I predict a slide in Toyota quality if they go through with this. And the thing is, the main reason that they are doing it, in my opinion, is to compete with lower cost companies, most notably the rapidly growing global powerhouse Hyundai.

But it is interesting because the way that Hyundai has been growing has been to vastly increase quality in ever generation of vehicle.

Remember how Mercedes was known for durability and quality back in the 80's? Then remember how they cut costs in the 90's and they became known for making completely unreliable luxo barges which competed with the old Jaguar for breaking down constantly? Watch out Toyota - the market knows cheap, and the car market has a long memory/lag effect (which is also why such initiatives often pay off in the 1-3yr timeframe).

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