Toyota Could Sell Engine Technology to Rivals as it Unlocks them

Hoping to boost sales and speed up the industry’s shift to lower-emission vehicles, Toyota Motor Corp plans to open up its powertrain technology to rivals, and a period of long guarding about what was beneath the hood of its pioneering Prius cars.

It would consider selling complete powertrain modules – engines, transmissions and other drive components – to its competitors, the world’s largest automaker said while announcing last week it would expand its gasoline hybrid technology development.

As cars are increasingly dependent on computerized components, making it easier to design similar parts across model ranges would be the prospect of giving rivals access to “one-size-fits-all” powertrains comes. The industry has moved on from competing largely on mechanical engineering.

As automakers face pressure from regulators to further cut car emissions and develop more long-range electric vehicles, that trend will likely accelerate.

Auto makers are competing more on style and packaging – giving drivers a bigger range of features from automated parking to cockpit concierges and are standardizing many mechanical parts as cars become more like glorified computers.

Keeping much of their jointly developed technology exclusive so as to have an engineering competitive edge on rivals, for Toyota, this is a big departure from having a tightly-knit network of suppliers.

“Toyota suppliers produce a lot of technology which can only be used by Toyota,” Toshiyuki Mizushima, president of Toyota’s powertrain company, told reporters. “We want to change that to a system where we develop technology with our suppliers at an earlier stage … so they can make that technology available to non-Toyota customers.”

For example, past versions of Toyota’s hybrid system didn’t fit other automakers’ cars, limiting suppliers’ options to sell to non-Toyota customers, noted Mizushima, who joined Toyota a year ago from group company Aisin Seiki Co.

Toyota’s are unique in that they are made by its group suppliers, allowing engineers at the automaker and its suppliers to collaborate in development even as powertrains combine parts often made separately by several independent parts makers.

“Until now, we couldn’t sell the same inverter used in Toyota’s previous hybrid system to other customers because it wouldn’t fit the motor, or the voltage was different,” said Yoshifumi Kato, executive director of engineering R&D at Denso Corp, Toyota’s biggest supplier.

“We can avoid this issue if suppliers can sell the entire system.”

As Toyota accounts for around half the annual sales at Denso and Aisin, the move should help auto parts companies such as Denso and Aisin to compete better against global rivals including Robert Bosch and Continental. Currently and spread their customer base.

In an industry where more automakers are setting up exclusive tie-ups on parts, he would like to see Toyota offer its powertrain modules to all its rivals, Mizushima said.

Using engines and other parts developed and made by Daimler AG’s Mercedes and its suppliers, Nissan Motor Co this year launched the Infiniti QX30 luxury compact crossover. Under a joint development agreement, Toyota already shares components for Fuji Heavy Industries Ltd’s Subaru BRZ sports car.

(Adapted from Reuters)

Categories: Economy & Finance, Strategy

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