What does this mean for existing models?
As the face of the motor industry continues to shift and change at an unprecedented rate, two of Japan's top automakers have announced that they will be cutting costs over the next few years to free up the cash required to develop the next generation of EVs and to focus on ride-sharing services.
According to Reuters, Toyota Motor Corp said that high-cost new technologies were putting pressure on them to generate savings, and Honda Motor Co announced that it would be slimming down its product range to cut production costs.
"We still weren't able to improve our costs enough last year," Toyota CFO Koji Kobayashi told reporters, adding that mounting investments required for new technologies and other R&D costs was making cutting efforts more challenging. "We need to work to find new ways to reduce costs this year," he said, claiming that the penny pinching mindset would apply to all aspects of the business.
Honda CEO Takahiro Hachigo said that the company would cut the number of car model variations to a third of current offerings by 2025, reducing global production costs by 10 percent which will enable them to redirect those savings towards research and development. "We recognize that the number of models and variations at the trim and option level have increased and our efficiency has declined," he told reporters at a briefing.
North American sales are not expected to pick up for at least another year for Toyota as the demand for their Corolla and Camry sedans continues to drop as customers shift to SUVs. Kobayashi has very ambitious targets to meet, which means Toyota will focus on producing more higher-margin trucks and SUVs in the short term.
Honda is likely to follow the same path although neither manufacturer has made any announcements on what models could potentially be removed from their respective ranges just yet. It doesn't take a genius to realize that any sedans and hatchbacks that aren't selling in meaningful numbers are going to be pushed aside before long.