The Rise of Direct Sales and Connected Customer Data in the Automotive Industry

  On July 4, 2023, a report on the development of Toyota’s solid-state battery sparked heated discussions in the industry. According to the British “Financial Times”, Toyota, the “big brother” in global car sales, said that it has made a major breakthrough in the field of solid-state battery technology, which can halve the weight, volume and cost of batteries, and improve battery durability. A solid-state battery with a mileage of 1,200 kilometers and a charging time of 10 minutes or less.
  A stone stirs up a thousand waves. On the one hand, Toyota is “not active” in the field of pure electric vehicles. As the head of Toyota Motor Corporation, Akio Toyoda always believes that “pure electric vehicles are not the future of the automobile industry, and should encourage the coordinated development of multiple routes such as hybrid and hydrogen fuel.” It even led Japanese car companies to build a camp against comprehensive electrification, believing that “pure electric vehicles are by no means the only way to achieve carbon neutrality”; on the other hand, Toyota has made great strides in the field of solid-state battery research and development. The technological breakthrough is an important milestone in the industry. It is expected to achieve small-scale mass production in 2025 and be equipped on hybrid vehicles. In 2027, it will begin to produce solid-state batteries for pure electric vehicles. In addition to liquid batteries, it provides pure electric vehicles with a power solution that is safer, has higher energy density, has longer cycle life and better low temperature performance. While high-profile opposition, while accelerating development; while publicly questioning, while officially announcing the results, Toyota’s operation is really confusing. Which one is this singing?
Previous: Toyota’s coaching change, facing the “Nokia moment”

  What is the “Nokia Moment”?
  In 2008, Nokia, the “absolute king” in the feature phone era, sold 468 million units annually, with a market share of 38.6%. During the same period, Apple’s first-generation iPhone, which had just been on the market for half a year, sold only 1.39 million units, not even a fraction of Nokia’s. But by 2012, Nokia’s smartphone shipments dropped to 35 million units, while Apple’s iPhone sales were 125 million units a year during the same period. In just four years, it was Nokia’s turn to “eat dirt.” On September 2, 2013, Microsoft announced the acquisition of Nokia’s mobile phone business for 3.79 billion euros (about 5 billion U.S. dollars), and then used 1.65 billion euros (about 2.18 billion U.S. dollars) to purchase Nokia’s patent license. In this way, Nokia “sold itself” to Microsoft, and the former king came to an end. This is called the “Nokia moment” in the smartphone industry. Later, whenever there is a change from old to new in an industry, especially when a newcomer replaces the old giant, it is called a “Nokia moment”.
  Today, the automotive industry is having a “Nokia moment”. In fact, in the field of new energy vehicles, Toyota’s seemingly inconsistent actions reflect precisely its “love-hate” and right-hand struggle in the choice of new energy routes. The reason is simple: as the “big brother” in global sales in the era of fuel vehicles, he is nostalgic for the outstanding achievements of the old era, but also afraid of missing the cusp of the new era. After all, traditional auto giants do not want to become the next “Nokia”, and facing the “Nokia moment” is a strategic choice that the giants have to face.
  Facing the “Nokia Moment”
  begins with Akio Toyoda, the president of Toyota Motor Corporation and the fourth-generation head of the Toyota family. At the end of 2008, Toyota surpassed General Motors for the first time and officially became the world’s largest automaker with an annual sales volume of 8.97 million vehicles. milestone moment. Akio Toyoda, who once served as the executive director of the North American and Chinese markets, has contributed a lot. In June 2009, the Toyota Motor executive, who holds the qualification of an international C-class racing driver and participated in the Nurburgring 24-hour endurance race, was officially promoted to the new president, ushering in a new era of rapid global growth for Toyota Motor.
  For the next 10 years, Toyota Motor has maintained its leading position in the global automotive industry, and started the “take turns” with Volkswagen. However, during the 10 years when Toyota and Volkswagen competed for the status of “No. 1 Brother”, the disruptor Tesla turned on the acceleration mode: in 2012, Tesla released the pure electric luxury sedan Model S; in 2015, Tesla launched the Hawk Model X, an SUV model with wing doors; in 2017, the more affordable Model 3 was mass-produced; in 2019, Tesla released the Model Y model. Since then, Tesla has completed the product layout of “SEXY” (3 is the “E” written backwards. In 2013, Ford registered the “Model E” trademark, and Tesla reversed the letter “E” to 3). Become the global leader in the field of pure electric vehicles, and become the world’s first pure electric car company with one million sales in 2022 (In 2022, Tesla’s global total delivery volume will be 1.31 million vehicles, a year-on-year increase of 40%, BYD’s The sales volume of pure electric vehicles was 910,000).
  You know, Toyota launched the world’s first commercial hybrid car Prius as early as 1997, which combined traditional fuel engines and electric drives to achieve double improvements in fuel economy and environmental protection, and once became the world’s first hybrid car. The best-selling hybrid vehicle brand; in 2014, Toyota launched the world’s first commercial fuel cell vehicle Mirai (future), with a comprehensive cruising range of about 500 kilometers, which can achieve zero emissions, long battery life, and fast charging. It can be said that in the field of new energy vehicles, Toyota is definitely “woke up early and caught up late”. Is Toyota’s lack of strategic vision, or insufficient technical research and development strength? Is it the lack of support from the upstream and downstream industrial chain, or is there a short board in the field of key components? In fact, it is not, but Toyota can’t let go of the “king complex” in the era of fuel vehicles, especially the vested market for fuel vehicles with larger sales. Running with a huge burden of fame and fortune on his back, the pace is obviously slower. Every step he takes, he will look forward and backward and hesitate: should we devote all our efforts to electric vehicles, or should we focus on fuel vehicles first? Is it to develop hybrid and hydrogen energy, or focus on pure electric? Is it to be a follower of Tesla, or to find another way to open up a new territory in a new field?
  A wandering “Nokia moment”
  It is this entanglement of looking left and right that makes Akio Toyoda’s strategic decision-making full of contradictions: On the one hand, Toyota Motor released the 2030 electric vehicle strategy in December 2012, announcing that it would invest 70 billion US dollars in the development of electric vehicles, while pure electric vehicles Investment will account for half of it. It is expected to launch 30 electric vehicles by 2030, with global sales of electric vehicles reaching 3.5 million (accounting for about 33% of its global sales in 2022), and releasing 15 new electric models in one go; , Akio Toyoda has repeatedly questioned, thinking that he is “one of the silent majority in the auto industry and should not only pursue electric vehicles.” In his view, “hybrid vehicles are the more practical solution at present, and if only zero-emission vehicles are promoted, then millions of consumers will have no suitable choice-as long as battery materials are still scarce and are used for charging. If more of the electricity is still shifting to renewable sources rather than purely clean energy, the auto industry needs multiple powertrains and alternative fuels to reduce emissions.” In fact, it is not that Toyota does not support electrification, but it opposes “electrification = pure electric”. This way of betting on multiple parties is “putting eggs in different baskets” or a “strategic fence”. Performance? On January 26, 2023, Akio Toyoda announced that he would officially step down as president and CEO of Toyota Motor from April 1, and instead serve as chairman, and Koji Sato, head of the Lexus brand, would take over as president and chief executive officer. executive officer. To make way for newcomers, this may be Akio Toyoda’s strategic choice to face the “Nokia moment”.

  However, can a coaching change really solve the problem? In fact, what really determines the life and death of a company is the right time, place and people. For Toyota, the right time and place are not a problem. Even if it passively accepts the right time (new energy era), Toyota still has advantages in terms of location (huge stock market, global appeal of the Toyota brand, technical reserves and hard scientific research strength, etc.). The only variable lies in Renhe: whether Toyota can reach a strategic consensus on new energy, whether it can use the power of the whole company to accelerate the transition to new energy, whether it can overcome the inertia of success in the era of fuel vehicles, and whether it can transform the determination of new energy strategic transformation For the execution of employees, and so on. In this regard, Tsuneji Sato’s statement in an interview with the media is intriguing: “How to deploy pure electric vehicles is only a matter of method. Toyota’s strategy for pure electric vehicles will change depending on the situation. From the perspective of energy security, it will not be done in one fell swoop. Shifting the focus to pure electric vehicles, but at the same time provide multiple options such as hybrid vehicles and fuel cell vehicles, and adopt an all-round strategy. In the medium and long term, Toyota is optimistic about pure electric vehicles and hydrogen vehicles with excellent hydrogen storage performance, but At present, we will seek a realistic and feasible way with a smoother transition process.” Of course, there is nothing wrong with this statement itself, but through the literal meaning, it is not difficult to see the desire of “needing, wanting, wanting, and wanting”, which may be This is where the difficulty of Toyota’s strategic transformation lies.
Next: Toyota transformation, choose an all-round strategy

  So, what is Toyota’s comprehensive strategy?
  Many people understand “multiple energy technology solutions” as Toyota’s all-round strategy, that is, Toyota will adopt a variety of technical energy sources including gasoline-electric hybrid, plug-in hybrid, pure electric, hydrogen electric, etc., and launch 40 models before 2025. The above electric and electrified models meet the needs of different users. In fact, this is just an expression of the electrification strategy in Toyota’s all-round strategy. The complete all-round strategy includes electrification, intelligence and diversification. The so-called intelligence refers to the extension of Toyota’s intelligent technology to automobiles (creating intelligent vehicle systems, creating cars with software and hardware that are more fun to drive), services (launching new services that connect cars with urban infrastructure) and smart cities ( Vigorously promote the construction of a weaving city, connecting people, cars and society in various ways); the so-called diversification refers to the diversification of Toyota Motor’s automotive products (more product lineups), and the diversification of the automotive market ( More untapped car consumers), diversification of car energy sources (more energy options). On April 7, 2023, when Tsuneji Sato announced the new management theme “inheritance and evolution”, he mentioned Toyota Motor’s goal: to become a mobility company – to implement Toyota’s all-round strategy through the traction of strategic goals. Specifically, it is divided into three stages:
  The first stage: Toyota Motor will try and flexibly apply new technologies in existing fields, and build a system and value around BEV (pure electric vehicles), laying the foundation for the next generation of pure electric vehicle products in 2026 ;
  The second stage: To meet the consumption needs of the future development of mobile travel, Toyota Motor expands emerging markets that have not yet been covered by cars, and uses low altitude to explore the feasibility of new mobile travel solutions; The third stage: Toyota Motor integrates mobile travel
  and social systems , starting from 2025, will speed up comprehensive demonstrations in urban clean energy, smart logistics, and three-dimensional travel, providing a blueprint for the realization of smart city construction.

  From the perspective of content, these three stages cover electrification, intelligence and diversification, which can be regarded as a roadmap for the specific implementation of Toyota’s comprehensive strategy. For Toyota, the issue of electrification and diversification is not the difficulty of strategic transformation, but the level of intelligence, which may become the key point of Toyota’s transformation. To be precise, how to transform from an automobile company to a technology company is the core of Toyota’s comprehensive strategy. There is a figure that illustrates the problem: in 2022, Toyota’s global sales will be 10.483 million vehicles, and Tesla’s will be 1.31 million vehicles. Toyota’s sales volume is 8 times that of Tesla’s, but its market value was once only 1/3 of Tesla’s. What is the reason? From the perspective of the capital market, whether a car company is an attribute of a traditional car company or a technology company, the valuation logic and standards are completely different. This is also one of the reasons why the valuations of new car-making forces including BYD, Ideal, Weilai, and Xiaopeng far exceed those of traditional car giants.
  Regarding this, Akio Toyoda has a clear understanding. When talking about Toyota’s coaching change, he said: “I am already a little conservative. In order for Toyota to enter a new chapter of future mobility, it is necessary for me to step back from the front line of operations. One step back.” It is uncertain whether taking a step back can solve Toyota’s problems, but the only thing that is certain is that fuel vehicle giants including Toyota, Volkswagen, Ford, and General Motors are all facing the “Nokia moment”. In fact, everyone knows that the “Nokia moment” will definitely come, but which traditional car giant can complete the transformation from the feature phone era to the smartphone era like Samsung Electronics back then, instead of Nokia and Motorola. Falling from the peak at a high speed, everyone has no idea. Transformation to a technology company has become a compulsory course for traditional car giants including Toyota, Volkswagen, Ford, and General Motors. How is Toyota transforming into a technology company? In the author’s opinion, it has to pass the following “three passes”.
  Level 1: From TPS to TTS
  When it comes to Toyota, the most talked about in the industry is TPS (Toyota Production System, Toyota Production System). As we all know, in terms of production management such as timeliness, automation, kanban method, standard operation, and lean, Toyota is a model for global car companies to learn from. Low-cost high-performance, low-cost high-quality, low-cost high-efficiency, many goals that seem to be opposed to each other, Toyota can do a good job of “unity of opposites”. In fact, whether it is the American GM and Ford, or the German Volkswagen, BMW, and Mercedes-Benz, it is difficult to surpass Toyota in terms of manufacturing.
  However, looking at Tesla, BYD, or new car-making forces including Ideal, Weilai, and Xiaopeng, as well as Huawei, Xiaomi, Baidu, Apple and other technology companies that have entered the market one after another, why can they build cars across borders? ? Even the production and manufacturing of many new power car companies are entrusted to other manufacturers for OEM production. The core lies in technology and user experience including autonomous driving, smart cockpit, and car-machine systems. Commuting and travel, of course, will still be the basic attributes of automotive products, but the technological experience that users value is increasingly becoming the key reason for buying a car.

  From this point of view, at least in the initial stage of the development of new energy vehicles, the level of lean production based on manufacturing is not the key to competition. Obtaining the recognition of consumers is the current strategic focus of Toyota.
  The second hurdle: From manufacturing advantages to comprehensive 2C
  For car companies, in the past, they used to communicate with customers through 4S stores (4S refers to: Sale, vehicle sales; Sparepart, spare parts; Service, after-sales service; Survey, information feedback) To interact with each other, a professional third-party agency conducts a satisfaction survey every year, listens to the voice of users, and continuously improves products and services.
  However, including Tesla and new car-making forces, they no longer choose the traditional 4S store model, but directly communicate with customers through direct sales. Customer data, behavior preferences, vehicle conditions, vehicle travel, performance issues, etc., will be seamlessly connected with the manufacturer in the first place. As for issues including new model design, sales process reengineering, service outlets, and improvement of human efficiency, it can also listen to customers’ voices in the first place, and continuously optimize and improve its own R&D and manufacturing levels.
  This comprehensive 2C (customer-oriented, user-oriented) model is not just as simple as canceling the 4S store, but requires Toyota to achieve strategic coordination at the levels of big data, cloud computing, artificial intelligence, etc., and through including IPD (Integrated Product Development, Integrated product development), LTC (Leads To Cash, from contact to payment collection), ITR (Issue to Resolved, from problem to resolution) will fully take root in 2C. This also involves Toyota’s organizational restructuring and cultural change.
  Level 3: From leader to follower
  In fact, if Toyota launched the first-generation hybrid model Prius in 1997, Toyota has achieved a cumulative sales of more than 20 million hybrid vehicles, ranking first in the world. But in comparison, Toyota’s sales of pure electric vehicles in 2022 will only be 24,400, which is not only far behind Tesla, BYD and other new energy giants, but also dwarfed by Volkswagen’s sales of 570,000 pure electric vehicles. . However, Toyota has a solid background in electrification and has a strong technical background: all-solid-state batteries, integrated die-casting, supersonic technology, self-moving assembly, next-generation hydrogen fuel cells, saddle-shaped and flat-shaped hydrogen storage tanks, etc. .
  However, Toyota must understand that technical background does not mean that customers pay the bill, let alone market leadership. Take Tesla and BYD as examples. The former is the benchmark for technological car manufacturing, and it is far ahead in terms of car-machine systems, autonomous driving, and smart cockpits; the latter is a model of industrial chain management, opening up the upstream and downstream value chains and achieving vertical vertical , with a full-category, full-price, and full-coverage product layout.
  From this point of view, how Toyota can learn from Tesla and BYD, and achieve real strategic transformation and self-revolution through making friends, building alliances, and strong alliances, is the key to the problem. Back then, Samsung Electronics, and today’s GAC Aian, are going through the industry cycle, trying to find ways to survive and live well, which is more important than the past glorious history and brand burden.
  As the saying goes, Toyota must evolve, and the transformation is just right.

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