Toyota Executive Says New Low-Cost Engines Not Based On Low-Tech Design

By YURI KAGEYAMA
Associated Press Writer

Dec. 13, 1996

TOYOTA CITY, Japan (AP) - Toyota Motor Corp.'s new low-cost engines are not based on a return to an old, low-tech design, as some U.S. engineers have assumed, a top company executive says.

The engines that will debut next year will be cheaper, with up to 20 percent fewer parts, Michikatsu Sato, a project manager in Toyota's engine division, said in an interview this week at company headquarters.

Sato declined to say how much less the new engines will cost, but he disputed reports that the savings could be as much as one-third.

Still, rumors in Detroit about Toyota's new engine have some Big Three executives worried about what could be a major competitive edge for Japan's No. 1 automaker.

Toyota's cheaper engines follow its move to lower prices on some 1997 models in the United States, the result of aggressive cost-cutting in other areas and the yen's drop in value against the dollar.

"Cost reduction is a basic with us," Sato said.

Some U.S. executives have said privately that the drop in Big Three sales and sharp increase in U.S. sales of Japanese models last month were a warning sign for Detroit.

In the interview, Sato said the new engines represent a significant refinement of the company's engine designs but not a radically new technology or return to a simple push-rod engine.

He said the number of parts will be reduced to roughly 700 from the current 800, and in a few years could be reduced to as few as 600.

Toyota is reducing engine parts by combining several into one and by having suppliers assemble many parts before delivery to the engine plant, Sato said.

Counting parts can be deceiving because a pre-assembled part counts as one even if it's made up of several. Still, the savings can be significant.

Pre-assembled parts allow automakers to reduce the number of workers on the assembly line. Robots perform much engine assembly, but fitting the various parts is often too delicate.

Buying pre-assembled parts also is cheaper than buying separate ones. Such savings are critical for Japanese automakers, which generally buy more of their parts from outside companies than American automakers do.

All automakers have been trying to simplify their engine designs to cut costs. But Toyota has clearly shown it is a couple of steps ahead, said Enda Clarke, an analyst with Dresdner Kleinwort Benson Asia in Tokyo.

"It further enhances the competitive edge of the Japanese," he said.

General Motors Corp. has saved money in recent years by focusing on improving its existing push-rod technology rather than going with higher-tech overhead-cam technology. But Sato said that made sense for GM, which was cash-strapped earlier in the decade and already had push-rod engine assembly plants.

Toyota's low-cost engines will hit U.S. showrooms about six months after they go on sale in Japan next year, Sato said.

The automaker also has a new fuel-efficient engine using "direct-injection" technology, which could pose another threat to Detroit.

Direct-injection engines spray fuel directly into the cylinders, where combustion takes place. That cuts fuel consumption by one-third. In standard gasoline engines, fuel and air are mixed outside the cylinder so the mixture is the same throughout the cylinder, requiring more gasoline to air.

Toyota and Mitsubishi Motors Corp. are the only automakers that have developed direct-injection engines. They have no immediate plans to market them in the United States, where emission standards are more stringent.


AP
From the online lubbock news at http://www.lubbockonline.com/news/
Dec 14, 1996
Copyright Lubbock Avalanche-Journal 1996

Toyota official defends automaker's low-cost engines

TOYOTA CITY, Japan (AP) - Toyota Motor Corp.'s new low-cost engines are not based on a return to an old, low-tech design, as some U.S. engineers have assumed, a top company executive says.

The engines that will debut next year will be cheaper with 10 percent to 20 percent fewer parts, Michikatsu Sato, a project general manager in Toyota's engine division, said in an interview this week at company headquarters.

Sato declined to say how much less the new engines will cost, but he disputed reports that the savings could be as much as one-third.

Still, rumors in Detroit about Toyota's new engine have some Big Three executives worried about what could be a major competitive edge for Japan's No. 1 automaker.

Toyota's cheaper engines follow its move to lower prices on some 1997 models in the United States, the result of aggressive cost-cutting in other areas and the yen's drop in value against the dollar.

Some U.S. executives have said privately that the drop in Big Three sales and sharp increase in U.S. sales of Japanese models last month were a warning sign for Detroit.

In an interview at Toyota headquarters, Sato said the new engines represent a significant refinement of the company's engine designs but not a radically new technology or return to a simple push-rod engine.

Sato said the number of parts will be reduced to roughly 700 from the current 800, and in a few years could be reduced to as few as 600.

Toyota is reducing engine parts by combining several into one and by having suppliers assemble many parts before delivery to the engine plant, Sato said.

Pre-assembled parts allow automakers to reduce the number of workers on the assembly line. Robots perform much engine assembly, but fitting the various parts is often too delicate.

Buying pre-assembled parts also is cheaper than buying separate ones. Such savings are critical for Japanese automakers, which generally buy more of their parts from outside companies than American automakers do.

All automakers have been trying to simplify their engine designs to cut costs. But Toyota has clearly shown it is a couple of steps ahead, said Enda Clarke, an analyst with Dresdner Kleinwort Benson Asia in Tokyo.

"It further enhances the competitive edge of the Japanese,'' he said.

General Motors Corp. has saved money in recent years by focusing on improving its existing push-rod technology rather than going with higher-tech overhead-cam technology. But Sato said that made sense for GM, which was cash-strapped earlier in the decade and already had push-rod engine assembly plants.

Toyota's low-cost engines will hit U.S. showrooms about six months after they go on sale in Japan next year, Sato said.

The automaker also has a new fuel-efficient engine using "direct-injection'' technology, which could pose another threat to Detroit.

Direct-injection engines spray fuel directly into the cylinders, where combustion takes place. By precisely concentrating the fuel at the spark plug, the rest of the cylinder can do with far less fuel and more air. That results in an ultra-lean-burning engine - cutting fuel consumption by one-third.

In standard gasoline engines, fuel and air are mixed outside the cylinder so the mixture is the same throughout the cylinder, requiring more gasoline to air.

Toyota will begin selling cars in Japan with the D-4 direct-injection engine this month.

Toyota and Mitsubishi Motors Corp. are the only automakers that have successfully developed direct-injection engines. They have no immediate plans to market them in the United States, where emission standards are more stringent.

Direct injection costs more. Mitsubishi added about $300 to the sticker price on the two models with direct injection that went on sale in Japan earlier this year. But Mitsubishi says costs should come down as production increases.


Toyota Crusade

Business Week  (cover story) 
7 April 1997 pages 104-114
By Brian Bremner in Tokyo, with Larry Armstrong in Los Angeles, 
Kathleen Kerwin and Keith Naughton in Detroit, and bureau reports 
This large article covers Toyota's plans for dominating the world automotive market. At the end of the article they discuss the great reductions Toyota has made in cycle times from concepts to marketable vehicles. Then they beging to discuss the PC 21 low cost engine program. That part of the article is reproduced below.

Unless there's a breakthrough in engineering, Wada figures his designers have probably hit the human limit for product development. That's why Okuda is spending big on the company's PC 21 program to produce an engine with fewer parts made at a cost one-third lower than current engines. Wada is mum on the subject, but a top finance official created a stir late last year by suggesting Toyota is close. Okuda is doing everything possible to make it happen. Some observers in Detroit think this may simply be a low-tech, push-rod engine. But others suspect that Toyota will figure out how to make its superefficient, high-tech overhead cam engine with far fewer parts. Such a feat would significantly widen the efficiency gap between Toyota and Detroit. The company has also announced a breakthrough in making affordable hybrid engines that rely on both electric batteries and gasoline.

If all this weren't enough, Okuda recently shocked analysts by vowing to generate 10% of company sales from nonauto businesses by 2000--some $10 billion in revenue. Toyota already has a sizable prefabricated-housing business and stakes in 30-odd telecommunications and broadcasting outfits. The company is also making a big push into leisure boats and looking seriously at producing engines for the small-aircraft industry. It seems dicey, considering all the competition in autos. But Okuda figures that industries prosper and then decline in half-century cycles. If that holds true for autos, he wants Toyota to be prepared.

Add it all up, and it's clear that Okuda has Toyota moving at uncharacteristic speed. The burning question is how long Toyota can keep it up. Okuda admits he's worn out from his travel schedule and often complains about the heavy security entourage that can cut him off from the rank and file. ''I really don't enjoy being accorded all this careful treatment,'' he says. But don't expect this dedicated workhorse to let up. Better to count on this most unusual Japanese executive to cast a meticulous eye on the thousands of tiny details that make a great car company.


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