A Bold Move by Toyota to Keep Up With Competitors?

Toyota Dealership
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Toyota Dealership

There are reports out of Japan that Toyota is setting a target of cutting prices 30% by 2013 in a strategy shift designed to keep up with hard charging competitors Volkswagen and Hyundai.

When I first read the report, I had two thoughts: There's no way they can cut prices by 30% and boy is this a gutsy move.

First of all, while the reportsays Toyota plans to cut prices by 30%, I think it's more a case of Toyota targeting cost cuts. What the company reportedly wants to do is target new methods, new possibilities for cutting the cost of developing and making up to 165 different parts. So this appears to be more about lowering costs, than about lowering sticker prices in showrooms. Still, 30% is an ambitious goal.

That brings up the risky part of this strategy shift.

Toyota will reportedly have its engineers look into different methods, different suppliers, and perhaps using of a different mix of raw materials in hopes of cutting costs.

On paper that makes sense.

In reality, that may be tough to make happen, while also insuring that quality doesn't slip.

Toyota's goal is to be more competitive with Volkswagen and Hyundai in China, India, and emerging markets.While Toyota sells more vehicles worldwide than both companies, it trails VW in China and Hyundai in India. Those are the key battle grounds in the future for the auto industry.

When contacted by CNBC, a Toyota spokesperson in New York said, “We are unaware of this initiative.”