Toyota's bitterness, Ford understood

New Eye Car Group Works

The author | Liu Sixuan

Edited | Sang Mingqiang

Ford and Toyota have been forced to the bottom by new energy.

According to the statistics of the American automotive media car industry Analysis: In 2021, Toyota and Ford's sales ranked 1st and 2th in the US auto market, both of which are more than one million units, but in stark contrast to this data, is the performance of the two companies in the secondary market: As of the end of last year, Toyota's market value was 256.76 billion US dollars, Andd's market value was 83 billion US dollars, and the sum of the two was less than 1/3 of Tesla.3.

In the context of fluctuating fuel prices and carbon neutrality, traditional established car manufacturers have fallen into a stagnant period of eating old money and short growth, even Toyota and Ford, under the rise of new car-making forces, have also been eclipsed, trying to reform to find a way out:

In December last year, Akio Toyoda (president of Toyota Motor Corporation) unveiled 16 electric models, responding to previous doubts about its backwardness in electrification; coincidentally, Ford also recently announced the separation of two business units of electric vehicles and fuel vehicles, plus the commercial vehicle division, forming three business units, and is expected to achieve independent operation and self-financing in 2023.

The old car factories led by Toyota and Ford are facing a major reshuffle.

01

Sequelae of dominance

The advantage trap is a hurdle that no one can avoid, and enterprises are no exception.

As the first company to introduce assembly lines to automobile production, Ford not only changed the automotive industry, but also pioneered the entire machinery manufacturing industry. Ford's innovation was to split the whole into small, fragmented parts and then assign them to specific individual employees, which had the advantage of both SOP (standardized) production and cutting the chain of interests.

According to Ford's assembly line operation mode, the time for each worker to produce a car in 1913 has been shortened to 2 minutes and 18 seconds, which is equivalent to 1/250 of each person's 8 and a half hours under the manual method, and finally created a miracle of 93 minutes of the whole vehicle leaving the factory and a new car born every 24 seconds.

There are two sides of the same coin, and behind the advantages often hides a fatal shortcoming, that is, a high degree of restriction on product differentiation. Mechanized assembly line production can not be changed, even if it is only a part adjustment, but also according to the new process, working hours to coordinate the change of the entire assembly line work arrangements, so from 1908 to 1927, Ford only sold one model of the T model, and only provided one color of black.

This practice of sacrificing differentiation for efficiency was quickly eliminated by history, and there was the story of GM's ban on Ford and becoming the world's largest automobile company.

The founder of Toyota Motor, Kiichiro Toyoda, is a person who is good at integration. After visiting Ford's auto yard, he pointed out the problem of Ford's inventory in a burst of blood, the labor time required to produce various parts is different, resulting in uneven workload of various departments of the factory, and eventually led to a large amount of inventory accumulation of some parts, which is like an invisible rope tied to Ford, becoming a sunk cost that must be paid for the attempt of differentiated products.

In order to overcome the problem of high inventory, on the basis of Ford assembly line production, Toyota created the TPS production method to create lean production. The so-called lean production is to let the employees on the product line become "multi-functional workers" and master the processing skills of multi-variety parts, so that you can adjust the work of a single employee from the perspective of the entire production line, so that all parts production and process operations can go hand in hand, eliminating the imbalance in production capacity.

But the problem now is that even if the training is multi-functional, there is no way to get rid of the big setting of producing "fuel-driven functional cars". Toyota's innovation, after all, is still in the pre-industrial era background of the coping strategy, to the electrical age, the existing production line needs to be torn down and rebuilt, the original organizational structure, talent reserves are no longer applicable, when small-scale car manufacturers have transformed and changed lanes, the huge Toyota and Ford stand in the same position: the elephant stuck in the turning moment.

02

It is easier to treat the symptoms and the root causes

"The annual production of electric vehicles will exceed 2 million units by 2026, equivalent to 1/3 of global sales, and is expected to further increase to 1/2 of the world by 2030." After raising the 2022 electric vehicle business expenditure to $5 billion, Ford has set this flag, compared to Ford, Toyota's appetite is only a lot more, "2030 to increase the electric vehicle sales target to 3.5 million units, and plans to spend 8 trillion yen (about $70 billion) by 2030 to promote the electrification of products." ”

From the current progress of the two, Ford has taken a step ahead, there are Mustang Mach-E crossovers, E-Transit trucks and upcoming F-150 lightning pickup trucks on sale three pure electric vehicles, of which, F-150 lightning pickups opened pre-sale within two days received 45,000 orders; on the other hand, Toyota, although it has shown prototypes and physical models, but there has not yet been a pure electric model officially released, rumors that the bZ4X listed in the middle of this year is not clear at the moment.

Workshops can be upgraded, technology can be learned, but these adjustments are still not curative, as we all know, the biggest dilemma for traditional car companies to turn around is people, but the two companies are troubled to different degrees, resulting in differences in the speed of transformation.

The longer the company lasts and the larger the scale, the heavier the bureaucracy within the organization, especially in the automobile industry, which is highly interconnected, Toyota wants to promote electrification, it must change the current talent pool, and shut down and integrate departments related to the design and manufacture of internal combustion engines.

A gasoline car needs about 30,000 parts, but an electric car only needs half, and Japanese analysts have calculated that the electrification of major car companies will cost Japan 200,000 jobs, which will cause large-scale unemployment problems, which are all problems that Akio Toyoda had to weigh when he implemented reforms.

In contrast, Ford's burden is lighter. After a setback, Ford has been making changes to the organization since the 1990s to replace the outdated corporate culture, and current leader Jim Farley has inherited the reform gene, and since he took the helm in 2020, he has led countless reforms, especially the "Ford+" restructuring plan launched last year, which has cut about 1,000 jobs and bought outs to 15,000 salaried employees.

The spin-off of business departments and the adjustment of personnel arrangements are also Ford's old problems in eliminating traditional car companies. After the proofing of new forces such as Tesla and Wei Xiaoli, the streamlined and flat organizational structure began to land smoothly in the automotive industry. Breaking the original supply chain division of labor, in exchange for the endogenous ability of software and hardware integration, for the automotive industry, is definitely a stroke of the deal, in the younger management team of the addition, Ford's road is obviously better than Toyota.

03

Catch up after recovering from illness

What Ford and Toyota urgently need to solve is how to regain the market that is being divided.

In 2008, Tesla unveiled its first electric car, the Roadster, 14 years after today. During this period, Tesla has continued to cultivate in the field of new energy and automatic driving, and has become a veritable technology company, known as the Apple of the automotive industry, with a high market value that once broke the myth created by traditional car manufacturers in the past.

Ford's first all-electric model, the Mustang Mach-E, was launched in 2019 and was only released at the end of the following year, making the technical intervention seem hasty. Take the OTA technology of the "card neck" of smart cars, Tesla, Weilai and other forerunners have been able to achieve FOTA (firmware upgrade), including but not limited to the remote upgrade of core components such as motors, gearboxes, chassis suspension and other core components control system; but ford and other traditional car companies are limited by business layout, currently staying at the SOTA (software upgrade) level, can only upgrade in-car navigation, audio and video entertainment equipment, firmware updates still have to be completed to 4S stores.

The intelligent home base is not thick enough, which was completely exposed in last year's lack of cores. Because there is no self-developed chip, a large number of car companies have to cut off their arms, and make the financial report less ugly by selling semi-finished products. A few days ago, a Spokesman for Ford said that the Upcoming Explorer series of cars will lack some non-critical chips (used to supply energy for the rear air conditioning and heating systems of the car), and consumers who buy this part of the "semi-finished product" will get preferential prices.

In other words, what traditional car companies represented by Ford can do at present is only to make functional cars smart, rather than really creating a smart car. These are two seemingly identical but very different logics: the former is durable goods, and the latter is fast moving consumer goods.

Just like the "2400 yuan online activation vehicle rear seat heating function" launched by Tesla Model 3 to car owners before, the FMCG style of play directly expands the profit space of the car, allows car companies to change from simply selling products to providing products and services, and also gives consumers an option to retain hardware and upgrade software, which is also in line with the current situation of greatly improved car penetration.

In the era dominated by electric and intelligent, traditional car companies such as Toyota and Ford have stepped down from the tide and retreated to catch-up. In this case, the transformation is inevitable, but the ship is difficult to turn around, and if traditional car companies want to make a refreshing user experience, the first thing to overcome is the original sales model, production process, and supply chain structure.

The simplest and most efficient way is to split the business units to operate independently like Ford, or simply rebuild the new brand, which is no different from the journey of the new forces when they first started, and they will fall into the dilemma of left hand hitting right hand. It is difficult to guess how much market the new forces have left for Ford and Toyota, but it is certain that there is not much time left for them to take back the market.