Launching the Corolla and concentrating investment in Takaoka (1966)

Don’t wait for demand — make the market through mass production

The heart of this decision was to build a dedicated plant ahead of any confirmation of demand and to open up the mass-market car segment through mass production itself. Takaoka pushed the idea of the passenger-car-only plant, first laid down at Motomachi, still further — into a concentration on a single model. The “eighty-points doctrine” championed by Tatsuo Hasegawa, chief engineer of the Corolla, held that a car should reliably score high passing marks in every respect rather than stand out in any one — a philosophy that was the flip side of cost reduction through concentrated investment. As chairman Taizo Ishida put it, Takaoka was “a stepping-stone toward a 100,000-unit-a-month system” — not a lone factory but one move in a plan to keep building dedicated plants one after another.

As a result, competition in passenger cars shifted its axis from a contest of sales power to a contest of the scale and speed of capital investment. The posture of readying the vessel ahead of demand carries the danger of turning into overinvestment if the read is wrong, but if it is right it hands the first mover an advantage in cost and supply. The Corolla and Takaoka are the very type of a bet that paid off — and that generated so much demand of its own that the vessel proved too small and had to be enlarged. How much capacity to stack up ahead of demand — this judgment about the scale and speed of capital investment reaches through to a Toyota that faces the same question again today in its transition to electrification.