TOKYO — Mulling the current era of industry consolidation, Akio Toyoda professes straight-faced that his company, the world’s largest carmaker, is simply no good when it comes to tie-ups.
“Alliances are something Toyota is not really good at,” the Toyota Motor Corp. CEO said last month with quintessential humility, when asked about the trend toward corporate coupling.
It’s an oft-repeated mantra by Toyoda, whose company once partnered with General Motors in the former New United Motor Manufacturing Inc. assembly plant in California.
Toyota has indeed left a trail of failed partnerships, from its fling with Tesla Motors to its hybrid-truck venture with Ford.
But is Toyota really that hard to get along with?
Recently, Toyota has been stepping up its overtures, especially as it counters increased pressure from interloping rivals from Silicon Valley and elsewhere outside the auto world.
Last month, Toyota said it would invest in American ride-booking company Uber to provide flexible leasing options to the company’s drivers and explore other new mobility opportunities.
This month, Japanese media reported Toyota is close to buying two robotics units from Google’s parent company in a move to boost the carmaker’s fledgling robotics business. And in January, Toyota doubled down on its partnership with Japanese minicar maker Daihatsu, agreeing to buy the remaining 48.8 percent of the company that it didn’t already own.
But even as he downplayed tie-ups at the company’s May earnings announcement, Toyoda also touted alliances as a strategic pillar. He said forging alliances will help Toyota overhaul and improve its own working practices.
“Alliances are an excellent opportunity to help us create ever better cars and to identify key ways to strengthen our global team,” the Toyota boss said.
How does Toyoda square this mixed messaging? And why would the mammoth automaker with an r&d war chest valued at more than $8.6 billion even need a rival’s help?
Chalk it up to changing industry tides that move even a behemoth like Toyota.
Toyoda is in the midst of piloting his company through a dicey transformation. He plans to expand sales, boost global capacity and introduce a new generation of production lines and vehicle platforms — all while building a company that can sustain annual volume above 10 million vehicles.
That’s a tall order even for Toyota.
“Rather than being obsessed with doing everything ourselves, we are aiming to enhance competitiveness by reaching out,” Toyoda said. “Alliances offer us valuable opportunities to learn why we could not do things that our partners could.”
Daihatsu, for instance, had competence that Toyota lacked in making ultrasmall, cost-competitive cars, he said.
Toyota’s tie-up with Subaru taught it about developing sporty cars such as the Scion FR-S coupe. The continuing alliance with BMW meanwhile may lead to next-generation fuel cell vehicles.
Cooperating with Mazda has given Toyota insights into how to manufacture in Mexico, as Toyota prepares to open its first large-scale plant there. Mazda manufactures a version of its Mazda2 sedan in Mexico for Toyota to sell in the U.S.
The need to partner is becoming more acute as the industry shifts into an era of autonomous driving and connected cars.
“On the tech side, they need new blood and people with new skill sets,” Kurt Sanger, lead auto analyst at Deutsche Securities Japan, says of Toyota’s changing situation.
Part of Toyota’s approach is exploratory, Sanger says. Toyota pairs with a partner to see how the other does business.
Toyota did not say how much it paid for its “strategic investment” in Uber. But the companies will study bringing ride-booking services to new markets, new leasing options and the development of new in-car apps. They may even establish a special fleet program to sell Toyota and Lexus vehicles to Uber drivers.
“Ridesharing has huge potential in terms of shaping the future of mobility,” Toyota Senior Managing Officer Shigeki Tomoyama said of the deal in a statement. “Through this collaboration with Uber, we would like to explore new ways of delivering secure, convenient and attractive mobility services.”
Under the purported Google transaction, reported by Japan’s Nikkei business daily, Toyota would buy Boston Dynamics, a U.S.-based firm, and Schaft, founded by a University of Tokyo graduate. Both are divisions of Google-parent Alphabet Inc.
The purchases would be made through Toyota’s new artificial intelligence and robotics unit, Toyota Research Institute. Toyota invested $1 billion to establish Toyota Research Institute last year as an r&d incubator for technologies that can be deployed in autonomous cars and helper robots for work and home.
Toyota declines to comment directly on talks with Alphabet, but it acknowledges that it does have its feelers out.
“Toyota and Toyota Research Institute regularly discuss possible collaborations with outside partners,” the company says.
The report of a possible robotics buyout comes as Toyota ventures away from its traditional auto business with an eye toward next-generation technologies and new company revenue streams.
Those could increase the pressure to partner.
Toyota announced the creation of Toyota Research Institute last November, saying the company will develop artificial intelligence systems that may guide autonomous vehicles and other products, such as household robots. More broadly Toyota wants to be a leader in programming software, just as it is in automotive hardware.
“Mobility itself is reaching a critical turning point,” Toyoda said. “We want to embrace that momentous change, and actively work to create types of new value that cannot be generated within the boundaries of the conventional automotive business.”
But who will be the ideal partner in this brave new world?
Toyoda said a meshing of corporate culture is as important as anything. “Just seeking an equity relationship is not a good enough reason for us to seek joining hands,” the CEO said. “Rather, what kind of chemistry is created by joining hands? And how can we find a way of building ever better cars?
“That is the yardstick we use in deciding whether to enter an alliance.”