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Opposites Excel

Companies that have different but complementary competencies can create something that is greater than their sum.
#Honda #Toyota #Scion


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If you consider mainstream vehicle manufacturers on a continuum, you have Toyota here and BMW way over . . . . . .  . here.

While BMW is the company that produces The Ultimate Driving Machine, automotive pundits might say that Toyota is the purveyor of The Ultimate Washing Machine.

And yet on June 29, Akio Toyoda, president of Toyota Motor Corp. and Norbert Reithofer, chairman of the board of management of BMW AG, got tougher at BMW Group HQ in Munich and signed a Memorandum of Understanding (MoU) for “long-term strategic collaboration.”

There are four areas that this MoU covers, and it is not the first time that the companies have gotten together for collaboration.  In March 2012 the two agreed to perform collaborative research on lithium-ion battery cells.  In December of last year, a contract was signed such that starting in 2014 BMW will be providing 1.6- and 2.0-liter diesel engines to Toyota for use in Europe.

But this time, it is more extensive.  The four areas are:

1.  Development of a fuel cell system
2. Powertrain electrification
3. Lightweight technologies
4. Architecture and components for a future sports vehicle


Consider: Numbers one through three seem almost natural.  Reithofer said at the times of the signing of the MoU, “We aim to further strengthen our competitive position in sustainable future technologies.”  And Toyota, without question, is the world’s leading auto manufacturer when it comes to hybrid technologies, which are essentially based on vehicle electrification.  Although the attention to fuel cells seems to have been more than partially eclipsed by electric vehicles (e.g., the Nissan Leaf and the Chevy Volt, which is arguably more of a hybrid than a full EV, but we’ll not quibble), fuel cells are still the automotive version of the Holy Grail when it comes to powering non-internal-combustion engines.

Lightweighting is a matter of course that is getting even more attention of late as OEMs find the ways and means to boost vehicular efficiency, powertrain notwithstanding.  Last year, for example, BMW took a 15.16% stake in SGL Group, a carbon fiber composite company. BMW and SGL also have a joint venture company, of which BMW has 49%.

But it is the fourth point that may strike some as being absolutely incredible.  BMW, of course.  But Toyota?  As we point out in a piece on the development of the Scion FR-S (http://www.autofieldguide.com/articles/scion-fr-s-smile), Akio Toyoda is enthusiastically pursuing the development of products that not only have quality, durability and reliability, but which are also exhilarating.  During the MoU signing, Toyoda said, “Toyota is strong in environmentally friendly hybrids and fuel cells.  On the other hand, I believe BMW’s strength is in developing sports cars.  I am excited to think of the cars that will result from this relationship.”


And the point is this: companies that have different but complementary competencies can create something that is greater than their sum.  Although the two companies in question getting together might seem unthinkable, it is actually genius.

Competitors of either of the two companies ought to be trying to figure out how they’re going to be able to address what BMW and Toyota are likely to create in these four areas.  And it is not likely that any single competitor is going to be able to do it alone.

If I were at Ford or GM, say, I’d be at Honda’s door, trying to work something out sooner, rather than later.

And the same goes for suppliers at all tiers.  Just as fuel cells have seemingly gone by the wayside, so has the notion of “co-opetition,” wherein competitors cooperate.   People need to revisit that now because BMW and Toyota have put it into high gear.