Toyota’s Cost Management and its Future Challenges

Abstract

The core of Toyota’s cost management is a continuous cycle of improvement based on the three pillars of cost planning, cost maintenance, and cost improvement. It is carried out as part of the target profit achievement activities under the system of the company-wide management plan. The essences of Toyota’s cost management are (1) cost matrix management (vertical profit and loss management by vehicle type and horizontal cost item management) and (2) horizontal expansion of cost management (cross-vehicle activities). Future issues for Toyota’s cost management are: (1) construction and enhancement of overseas cost planning system, (2) response to the shift to electronics, software, and EVs in automobiles (restructuring cost reduction methods in response to changes in cost structure), (3) flexible response to organizational reforms, (4) response to the servitization of the automobile business, and (5) response to the virtualization of the automobile business.