Section 9. Preparations for Mass Production and Mass Sales
Item 3. Expansion into Latin America
Brazilian production increased
The Brazilian automobile market grew rapidly starting in 1970. Total sales exceeded 500,000 vehicles in 1971 and surpassed the one million vehicle mark in 1978. In contrast, Toyota do Brasil's annual production volume fell below the 1,000 vehicle level.
In 1971, Toyota Motor Co., Ltd. Senior Managing Officer Taiichi Ono visited Toyota do Brasil, which was experiencing poor performance, to give instruction on the Toyota Production System. Senior Managing Officer Ono experienced the conditions of Toyota do Brasil firsthand and his advice led to Toyota Motor Co., Ltd. sending a survey team to the company in November 1972 to increase the internal production rates and the company's investigation into producing passenger cars. The team investigated expansion of the existing plant, acquisition of a new plant site, and other measures and prepared production capacity expansion plans for Toyota do Brasil.
Based on this plan, a casting shop equipped with a low-frequency induction furnace was introduced in May 1974 and a stamping shop was expanded in October, followed by the completion of a forging shop with a 1,600-ton forging press in April 1975. The machining shop was also expanded, and internal production of parts such as driving gears and shafts, which had been outsourced, was increased. These investments were made with support from Toyota Motor Co., Ltd. In addition, the Model OM-324 diesel engine manufactured by Mercedes-Benz do Brasil, Ltda. was replaced by the Model OM-314 (3.8 liter, direct injection) in January 1973, increasing output and improving marketability.
Following implementation of the production capacity expansion plan, Toyota do Brasil's performance turned sharply upwards in 1975. Production volume exceeded 1,000 units in 1976, and surpassed 4,000 units by 1979. The company was also able to completely eliminate its accumulated losses in 1980.
Starting in 1981, automobile sales volumes in Brazil fell to the 500,000 to 700,000 unit range, but Toyota do Brasil made active investments including refurbishing its obsolete machining equipment and stamping equipment in 1984 and expanding its painting, heat treatment, and machining processes from 1986 to 1988. During this time, cumulative production reached the 50,000 unit mark in September 1987, and facilities were enhanced with the aim of introducing two-shift production on the Bandeirante manufacturing line.
Efforts to enhance the marketability of the Bandeirante continued, such as making some changes including switching from round to square headlights in November 1989 followed by adoption of the Model OM-364 engine (4.0 liter, direct injection) with higher torque in March 1990. Two-shift production was introduced at the San Bernardo Plant in August of that year, and production volume in 1991 reached 6,754 units, setting a new record high.
In 1991, 1.55 million square meters of land in Intaiatuba, Sao Paulo, located about 100 kilometers to the northwest of Sao Paulo City, was acquired for future expansion. The Indaiatuba Plant began operations in August 1998, producing the Corolla.
Later, the Bandeirante switched in April 1994 from the OM-364 diesel engine manufactured by Mercedes-Benz do Brasil, Ltda. to the 14B diesel engine (3.7-liter, direct injection) manufactured by Daihatsu Motor Co., Ltd. in order to comply with the 1996 emissions regulations. Even with this change, however, the Bandeirante was unable to comply with the 2000 emissions regulations. As a result, production of the Bandeirante ended in November 2001, closing the curtains on a 42-year history. Cumulative production reached 100,000 units in November 1999.