5.3. The Challenges and Benefits of Local Customization

The challenges of local customization are the same for every car manufacturer. Success hinges on proper handling of the economics of product development and manufacturing. The chief hurdle is figuring out how to scale vehicle design and manufacturing to yield cost benefits, while satisfying local needs for customization. Toyota achieves both without compromising one or the other. As pointed out in Chapter 2, Toyota enjoys better economies of scale per model than its competitors in the two major markets of Japan and the United States.

However, 14 of its 54 overseas models sell in less than 10 markets (Australia, Canada, China, Hong Kong, New Zealand, Singapore, Taiwan, Thailand, United Arab Emirates, and the United States). These 14 models are RAV4 EV (electric vehicle), Mark II, Alphard, Liteace, WISH, Comfort, the IMVs (considered one model), Scion xB, Scion tC, Century, Tundra, Sequoia, Highlander, and Lexus GX. They account for one-fourth of all Toyota overseas models and were developed for a limited number of countries in order to customize them to local needs, yet they all share chassis frames and have common parts with car models sold in other markets to reduce design complexity and production cost.

As challenging as local customization may be, it has benefits in auto manufacturing. For one thing, it exposes Toyota to the diversity of perspectives it needs to overcome the limitations of its own provincial origins. Learning ...

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