Daihatsu dismantles 'Toyota Way' as market changes

Ikeda, Japan

WHEN Daihatsu Motor Co launched the Mira e:S minicar in 2011, the Toyota affiliate thought it had found a model for emerging markets. The Mira e:S - e for eco, S for smart - was capable of going 30 kilometres on a litre of petrol for a sticker price of just 795,000 yen, or S$8,965. And indeed, the car was a hit, super-charging Daihatsu's earnings.

A number of improvements - in manufacturing, engineering, procurement - went into the car. But the real secret to success, says Kosuke Shiramizu, Daihatsu's chairman at the time, lay in taking something out of the company's business model: the vaunted Japanese keiretsu system.

Mr Shiramizu, now a Daihatsu advisor, says Daihatsu shaved off roughly US$1,000 in the manufacturing costs of the car by dismantling its keiretsu - an informal but close interlocking business relationship between a manufacturer and its suppl…