Toyota Restructures into 9 Business Groups

Toyota Motor Corp. says it will reorganize its automotive operations for the third time in five years in an effort to streamline operations. The latest changes will begin in April.

“This structural change may not be the ultimate solution,” says President Akio Toyoda. “Whether or not this structural change turns out to be the right solution is in our hands.”

The new plan will shift Toyota from a function-based to a product-based structure, according to the company. It says the switch will reduce the excessive amount of cross-functional coordination required under the current organization.

In 2011 Toyota streamlined its board of directors, took layers out of its organization chart, enabled greater decision making by its overseas affiliates and created regional advisory committees.

Two years later it reorganized its regional operations and divided its automotive operations into four units: Lexus, Toyota 1 (N. America, Europe and Japan), Toyota 2 (Asia, Latin America and Africa) and Unit Center (powertrain).

This year’s overhaul will form seven new product-based, in-house companies that are responsible for short- and mid-term strategy and product development:

Innovative R&D and engineering

• Compact cars
• Midsize vehicles
• Commercial vehicles
• Lexus International
• Powertrain
• Connectivity

Toyota also will reorganize its function-based R&D, product engineering and manufacturing operations into “mass production” and “advanced” categories. The resources will then be allocated to each of the seven units. The company says its existing Toyota 1 and Toyota 2 organizations will serve as a “check and balance” for the new groups.

In addition, Toyota will create a new Frontier Research Center to develop technologies and business models from a long-term and societal perspective.

Finally, the company will set up a new corporate strategy division to combine existing mid- and long-term strategic planning functions that don’t fit into one of the other new groups.