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Toyota ready to remake itself as IT transforms autos

TOKYO -- Huge changes sweeping the auto industry -- from the development of driverless cars to the ride-sharing boom -- are forcing carmakers to compete not only against themselves but, increasingly, with tech companies. 

Toyota President Akio Toyoda

Even a giant like Toyota Motor is feeling the heat. The Japanese automaker has been in talks with Google, the U.S. search powerhouse, on and off for about five years now. They are said to be discussing data terminals to be fitted in Toyota cars, among other things.

"They want data but we can't let them cross that line," a Toyota official said. A 21st-century version of the titanic tie-up seen between Toyota and General Motors of the U.S. back in the early 1980s has yet to materialize.

Connectivity is key

The increasingly overlapping interests of the auto and information technology industries is a reflection of the structural changes occurring in carmaking.

"In addition to driving, turning and stopping, 'connecting' will be [a basic] function" of an automobile, Toyota President Akio Toyoda has been quoted as saying. With semiconductors becoming ever more advanced and cheaper to produce, efforts to use them as a data-gathering tool for cars are in full swing. For Google, which wants to create new services by collecting a huge assortment of information, the idea of accessing the vast data provided by Toyota cars is attractive.

"If we had data on the status of windshield wipers on all vehicles, we could understand detailed weather conditions in different places," said a Toyota employee while sifting through information collected by sensors that come standard in its passenger vehicles in Japan and the U.S. Another employee mentioned how a sensor has picked up a long line forming at a recently opened shop. That kind of data collection, if applied to tens of millions of Toyota cars across the world, could spur the creation of countless new businesses.

"In five or 10 years, we may end up being a different company," said Toyota Chairman Takeshi Uchiyamada. As a company that started out as a maker of textile machines about 90 years ago, Toyota knows a thing or two about change.

Toyota has propelled itself to the top of the automaking pyramid with the help of what are essentially low-tech techniques, such as the kaizen strategy of continuous improvement, and the suriawase method of integration and coordination among parts from different manufacturers. But it may have to radically transform itself if it wants to thrive in the new era.

Toyota is not wasting any time trying to adapt. Last November, it set up a fund with Sumitomo Mitsui Banking and others to invest in new technologies. Two months later, it launched a subsidiary in Silicon Valley to study artificial intelligence because it "couldn't find the necessary talent in Japan," Uchiyamada explained. Toyota's go-it-alone mentality is fading fast, it seems.

Poaching talent

Toyota tapped AI pioneer Gill Pratt to head the new AI research unit. Some 10 engineers followed him out of Google's headquarters about a 15-minute drive away. Pratt has said he sees potential applications for AI in autonomous driving, robots and Toyota's production systems. But even as the carmaker seeks ways to join hands with Google, the companies are competing for supremacy in the development of next-generation vehicles.

Toyota's success in this new chapter in automaking is far from guaranteed. Google has teamed up with Fiat Chrysler Automobiles, the American-European carmaker, to develop driverless cars. The German trio of Audi, BMW and Daimler has acquired a provider of map and location information from Nokia, the Finnish telecommunications equipment group. All of these deals are aimed at getting access to data instead of increasing scale.

Still, Kiyotaka Ise, senior managing officer in charge of technology development at Toyota, is bullish: "Software is important, too, but at the end of the day, you need the capacity to put things together to make a car. We will win with our comprehensive technology."

(Nikkei)

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