Exclusive: Toyota, pressed to innovate, is cutting marketing costs to fuel research
Four people familiar with the matter said Toyota has begun cutting costs, starting with sales and marketing, and shifting resources to research that will help keep up with new competitors.
One of the company\'s first steps is to cancel a long-term contract with a Chinese company.
According to sources, the company\'s term \"communication and advertising agency \".
Koji Kobayashi, chief executive and chief financial and risk officer of Akio Toyoda, wants to emulate Tesla, Google and Tencent --
All of this depends heavily on cheaper, more innovative
They say the savings should be invested in emerging technologies such as autonomous vehicles.
\"We may have posted record profits, but we don\'t think we have kept up with their investment,\" a senior Toyota official told Reuters . \".
In order to do so, Kobayashi hopes to take advantage of the funds that were used exclusively for car marketing and general expenses, which totaled £ 2 in the year ended.
72 trillion yen ($24. 66 billion).
Company Report 2. 4 trillion yen ($21. 68 billion)
Operating income over the same period has made Toyota one of the world\'s most profitable automakers.
The company\'s profit margin is around 9%.
But companies like Google and Apple
Now compete directly with Toyota in automotive technology.
Have several times the number.
Toyoda and Kobayashi saw Toyota\'s super-
Efficient factories and more wasteful sales operations, the source said.
The ban on Beijing Dentsu to start new business with the carmaker next year and cut back on work already approved indicates that efforts to cut spending are serious, sources said.
They say that while Toyota may bid again for a Toyota contract in 2020, it will be a tough sale.
Beijing Dentsu\'s annual business for Toyota is worth about $50 million.
None of the four wanted to be recognized because they were not authorized to speak to the media on the issue.
Toyota is frustrated by the cost of at least two of Denton\'s activities in China: a ride --and-
Drive for Toyota\'s premium Lexus brand and Toyota\'s Beijing auto show display stand in April.
Comments from car manufacturers show \"out-of-
How to Control luxury in the execution of these events-not over-
Another source said.
Beijing Dentsu declined to comment.
This is not the first time Toyota has clashed with Dentsu.
In 2016, the marketing company admitted to charging for services it did not provide. Toyota’s cost-
According to two sources, the goal of layoffs is wholesale outsourcing, which is known in Japan as \"marunage \".
It can include items such as media purchases, promotions, and consumer and market research.
Sources added that Mr. Toyoda and Mr. Kobayashi saw marunage as an obstacle to the efficiency of Toyota\'s unlisted companies
Affects the company\'s ability to develop and produce better vehicles.
At Toyota, engineers will do everything possible to understand each component and process, all the way to the cost of each component.
Even if they outsource production, they will produce it themselves first to understand its cost structure, the source said.
Toyoda and Kobayashi want to instill more discipline in Toyota\'s sales and marketing team and move in --
Four sources said some jobs are routinely outsourced today.
Executives hope this will help provide more money for companies to keep up with Silicon Valley. Silicon Valley is investing in future automotive technology.
Waymo\'s lawsuit against Uber over trade secrets, for example, shows that Google\'s parent company Alphabet costs $1.
1 billion self-development
Driving technology from 2009 to 2015.
That\'s what Toyota has set aside for a research institute it founded in 2016.
In June 13, Toyota invested $1 billion in Southeast Asia.
The Hailing app, Grab, gives it access to travel data that can help it develop Next
Other established automakers are also taking steps to reshape their marketing operations.
In response to the question, Ford said the company tried to \"improve marketing efficiency\" by using new tools and technologies rather than investing in traditional methods \".
However, this effort does not include Ford\'s Chinese department or the Lincoln brand.
Toyota\'s current cost
The cutting campaign, driven by Kobayashi, began in January.
Sources said Kobayashi and Toyoda Zhang first paid attention to Beijing Dentsu, in part because Toyoda took part in a large Lexus event in the southern Chinese city of Shenzhen.
Both refused to be interviewed.
Four sources said the most infuriating Toyoda and Kobayashi were what they called unnecessary luxury activities.
Then Toyota started its last time. minute cost-
Dentsu cut work on the display designed for the April Beijing auto show.
When visiting the exhibition during the event, it was clear where the cost was cut: some rooms had no ceiling, and the VIP area, which was originally equipped with high-end tables and seats, has now been downgraded
Chairs and other simple furniture.
Generally, the kind of bracket assembled by Dentsu costs 1 billion yen ($10 million)or more.
Toyota can only reduce costs a little.
\"Why spend so much money when we use an auto show?
Said a knowledgeable man.
\"This is an out-of-
We control the expenses.