Toyota CEO Warns: Adapt or Perish—Overhauling Quality Standards and Supply Chain

Facing dramatic industry upheaval, outgoing Toyota CEO Koji Sato issued a stark warning at a supplier summit: the auto industry is under "unprecedented survival pressure," and even Toyota—the world's top-selling automaker—will "not survive" unless it undergoes fundamental transformation. He stressed the urgent need to boost overall efficiency and reinvent competitive strategies. To this end, Toyota is implementing a new initiative called "Smart Standard Activity," which relaxes overly stringent quality requirements for components invisible to consumers. For example, minor imperfections such as black specks on headliners or slight wrinkles on steering wheels will no longer automatically trigger part rejection. This change alone is expected to eliminate over 10,000 wasted units per month just in wiring harnesses. Additionally, the company is revising its supply chain strategy by allowing suppliers to discontinue long-term retention of dedicated molds for service parts, thereby reducing costs and improving efficiency. Incoming CEO Kenta Matsuda echoed these concerns, noting that despite Toyota’s robust annual sales of 11 million vehicles and strong profitability, the company cannot afford complacency. Lowering the break-even point and rebuilding competitiveness will be key priorities moving forward.