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Google And Apple Knocking On The Car Door? 'No, We Won't Let Them Inside,' Toyota Exec Says

This article is more than 7 years old.

Didier Leroy in Tokyo. (Photo: Bertel Schmitt)

Google and Apple reportedly have performed a tactical retreat in their efforts to disrupt the car industry, and shifted from making cars to developing software for autonomous driving and infotainment. It will be a hard sell as large global automakers devote more resources to coding their own. This week, Toyota and Renault-Nissan joined the growing chorus of “Google, no thanks.”

“Many say carmakers have no future, and that they will become commodity producers, because Google, Apple, Microsoft or Tesla will take the lead in the automotive business in the future. We don’t want to give them the space to do that,” Toyota’s Executive Vice President Didier Leroy told a small group of reporters at the company’s Tokyo HQ yesterday. “Do you believe we will just open the door and say go ahead? No, we won’t let them come inside like that,” Leroy added.

Didier Leroy, a former Carlos Ghosn disciple and longtime leader of Toyota’s European business, has been made Toyota’s first non-Japanese EVP, member of a four-man group that reports directly to Toyota’s CEO Akio Toyoda and is tasked to think and act as if they run the whole company. As president of Toyota’s Business Unit No. 1, the Frenchman is responsible for “around 65% of Toyota’s sales,” we heard yesterday. He also is Chief Competitive Officer, a role he described like this:

“Grasp faster and better than any competitor the needs of the customer in all the different markets. Reduce the lead time to develop new products to be faster on the market.”

As far as Leroy is concerned, this is “no longer just a competition with GM, Ford, Chrysler, Nissan, or Honda.” He clearly views Google and Apple as competitors, despite, or maybe because of the fact that both have reportedly ditched carmaking plans to focus on the brains of future cars while leaving the tough part of making the hardware to Toyota, VW, et al.  Said Leroy:

“If you consider the next 20 years, a big part of the growth in the automotive industry will not come from more vehicle sales. It will come from services.”

With that, data will turn into one of a car company’s core assets. Of course, Google and Apple covet these data, and access to the roughly one billion people held captive in their cars each day. Of course, most automakers don’t want to end up sucked dry like newspaper and magazine publishers. Automakers have the scale and financial wherewithal to fund their own software development, and they do.

Earlier in the week, down the road from Toyota in Yokohama, Ogi Redzic, head of Connected Vehicles and Mobility Services at the Renault-Nissan Alliance, told reporters assembled at the Nissan HQ that he is fielding a small army of coders to develop connectivity technologies in-house. Soon he will have 1,000 experts in software, cloud engineering, data analytics, machine learning and systems architecture working for him and the Alliance. They develop a common hardware/software platform, based on Linux. The cloud services are provided by Microsoft via Azure. There was no Google or Apple in Redzic’s presentation.

Renault/Nissan hired Redzic away from the former Nokia HERE, a mapping provider that was bought by a group of German car manufacturers who also don’t want to play nice with Google or Apple, and who also bulk up on software manpower. In America, GM and Ford likewise spurned Silicon Valley overtures. Only Fiat Chrysler seems to be warming up to Google, probably because it is lacking the wherewithal to say no. Soon, the automotive field will be divided into software haves and have Googles, and the way it looks, the have Googles will be in a weak minority. Meanwhile a few months ago, Toyota became a permanent member of the pantheon of the open source movement, the Open Invention Network, where it joined ranks with open source powerhouses such as Red Hat, SUSE, and IBM. The last new member to join OIN was Google in 2013. Automakers around the world are collaborating on open-source Automotive Grade Linux which promises to become the backbone and standard setter in cars, just like open-source Linux empowers you to read these words.

Long before Apple or Google will succeed in selling their systems to automakers who cannot afford making their own, the giants of the automotive world will deploy their ultimate weapon: scale. Toyota and Volkswagen sell 10 million cars each per year, and you can be sure that at that mass purchase, they will not have to pay the thousands of dollars per car Tesla must spend to equip new cars with a currently software-less Autopilot 2.0. Sure, the Tesla system eventually will learn, but imagine the combined network effect of tens of millions self-learning cars put on the roads by established automakers.

Didier Leroy in Tokyo. (Photo: Bertel Schmitt)

Why do automakers embrace technologies that supposedly will disrupt them? At Toyota, Leroy does not deny that some mobility services will eat into car sales, but he clearly does not believe that they will bring the auto industry to its knees:

“In some developed countries we cannot expect a continuation of unit sales growth for the next 10 or 20 years. Potentially through a clot of different activities including carsharing and other business models, we can even expect a slight decrease in developed countries. We are still convinced today that the growth in the emerging markets will largely balance the decrease in some developed markets.”

What doe-eyed projections of pod-based transportation overlook is that billions of people in the world are still car-less, and that their version of a share economy is a family of five on a scooter.  They will buy cars once they can afford them, while inhabitants of rich metropolises increasingly use old-style mass transit. Less than half of the households in New York City and Tokyo own a car, and they have done that long before transit-deprived Silicon Valley has taken notice.

Just like automakers transform into software developers, they also rush to buy into companies that supposedly will put them out of business. The feeding frenzy was kicked off months ago by GM, which became a shareholder of ride-hailing service Lyft. Volkswagen bought shares of Gett, BMW became a shareholder of carpool-platform Scoop. Toyota invested in Uber, “but not the amounts other carmakers invested,” Leroy said yesterday.

As predicted by yours truly half a year ago, automakers buy into ride hail business for two reasons: Market research, and to sell cars. Said Leroy:

“What we really want to learn from Uber is how do they collect, manage and use data. In many parts of the world, Uber drivers are in Toyota cars. If we can sell more cars based on that, why not.”

That’s where the consensus with Uber ends. “Uber’s dream is taxis without drivers,” Leroy said yesterday, and he added: “We are not thinking the same as them.”  It definitely will be a while before the predicted future arrives, Toyota’s Chief Competitive Officer said:

“Some companies say by 2020, we will be in chauffeur mode, completely autonomous, you can sit in the back of the car and read your newspaper. Of course it’s possible. But if we want to do it in a very safe way, then probably it will be later than that. And I can tell you that we are not late on that. and that we have plenty of very advanced research.”

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