Introduction:
Toyota Motor Corporation is a Japanese multinational automotive manufacturer with headquarters in Aichi, Japan. Toyota was the largest automobile manufacturer in the world in the year 2012, with 333,498 employees. Toyota produces more than 10 million vehicles every year and is the only manufacturer in the world to do so. In July 2012, Toyota manufactured its 200th million vehicle. Toyota produces a diverse range of automobiles catering to different sectors of the automobile industry. Toyota manufacturers vehicles under five different sub-brands including Toyota, Lexus (luxury oriented brand catering primarily to the US luxury car market), Scion (youth brand targeting youngsters), Ranz and Hino. Toyota is one of the world's most prominent and well known brands, with its hallmark being reliability, innovation, quality, and affordability. (GM, 2013)
Strategy:
The reason behind Toyota's immense success worldwide has been the production techniques that the company has employed. Toyota has been famous for establishing plants in Countries it sells its vehicles in, and this was evident right from the time Toyota first ventured into the United States. The company made its first manufacturing plant outside of Japan in 1959, (in Brazil). Localizing production has ensured that Toyota not only produces cars locally, but also designs them there. This ensures that each vehicle Toyota creates is tailor made to the market it caters to. Moreover, Toyota also has strong relationships with local suppliers and labor, factors that are of paramount importance in ensuring Toyota's quality.
History:
Toyota Motor Corporation was founded on August 28, 1937 by Kiichiro Toyoda. The company was a spinoff of Kiichiro's father's Toyota Industries, which consisted of loom factories. Before founding the company, Kiichiro toured the United States several times, visiting different automobile production plants. Satisfied with the automobile industry had in store, Kiichiro then founded Toyota Motor Corporation and took Toyota into the world of automobile production. Kiichiro was not troubled by the fact that General Motors was already operating in Japan before he set up his company, and instead, deemed the competition as a motivational push.
Toyota produced its first ever engine (Type A) in 1934, and its first ever automobile (Type AA) in 1936. At the time when Toyota was founded, Japan was undergoing immense economic difficulties. This prompted Kiichiro to start the production of fuel efficient, technology sound cars, something that Toyota continues to do till this day.
Speaking of Toyota's history in the United States, the company was formed in October 31, 1957 when it established its headquarters in Hollywood, California. Toyota began its sales in 1958 in the US and sold a modest total of 288 vehicles. However, Toyota soon realized that its vehicle, the Toyopet, was not up to the mark to be competitive in the US, and was soon discontinued. Toyota soon found its footing though in the form of the legendary Land Cruiser and Corona. As the success came, Toyota later established the luxurious Lexus brand in 1989. The rest then is history.
CEO:
The current CEO of Toyota Motor Corporation, Toyota Motor North America Inc., and Toyota Finance Australia Ltd, is Akio Toyoda. Akio was appointed the CEO of Toyota in 2009 and is still in charge. The CEO is famous for dragging Toyota back from many tough situations such as recalls, the global recession, and the tsunami.
Akio Toyoda joined Toyota way back in 1984. He joined the Board of Directors in 2000. Toyoda was believed to be the natural heir to the Toyota throne, and he replaced Katsuaki Watanabe in 2009. Akio Toyoda famously appeared before the US Congress in 2010 when Toyota was hit severely hit by the unintended acceleration issue. Mr.Toyoda was repeatedly grilled by the lawmakers, and ensured them that Toyota would never let it customers down again.
Popular Vehicles:
Toyota's most popular and best-selling vehicle is the Corolla. The company sold its 40th million Corolla in July 2013. The Corolla is also the best-selling vehicle in Japan. In addition, Toyota's Prius is considered to be the pioneer of hybrid technology in passenger vehicles and is also the sales leader in its category.
Sales:
Toyota has been one of the global automobile dominators when it comes to sales. In fact, in the year 2013, Toyota retained its title of the world's largest automaker (a title it had lost in 2011 due to the tsunami disaster) by selling a whopping 9.98 vehicles worldwide. The company beat competitors such as General Motors and Volkswagen who each had sales of 9.71 and 9.5 million vehicles respectively. The sales that Toyota managed to achieve were all the more impressive considering the huge impact the 2011 Tsunami had. While the United States did play a big part in helping Toyota achieve the massive sales figures, it was the emerging markets and China that drove Toyota forward. Discussing Toyota's sales by individual regions, here are how the figures stack up:
North America: 2012 Sales = 1720.6 Units (x1000)
Latin America: 2012 Sales= 242.8 Units (x1000)
Europe: 2012 Sales= 464.1 Units (x1000)
Africa: 2012 Sales= 151.7 Units (x1000)
Asia: 2012 Sales= 2565.7 Units (x1000)
Japan: 2012 Sales= 3492.9 Units (x1000)
Evaluating the figures shown above, it is clear that Toyota's largest market is it's home, Japan. However, Toyota also has a very strong presence in almost all parts of the world, with Asia and North America being its strongest markets after Japan. It is important to note that the figures shown are for the Toyota and Lexus brands, so Toyota's other sub-brands such as Scion and Hino are not included.
% of US Market Share:
Toyota enjoyed a peak of 17% of the US car market share before the tsunami disaster in 2011 made things take a downturn. In 2010, the company had 15.2% of the US market share, a figure that dipped to below 13% in 2011. However, Toyota showed strong signs of recovery post disaster, and by 2012, had 14.5% market share. By 2013, the figure dropped slightly to 14.2%. However, the figures from the last two years(2012 and 2013) show that, despite the serious hiccups, Toyota has managed to get back to the top once again. Toyota's main competition in the US is General Motors and Ford. Other Japanese brands such as Nissan and Honda are competitive too, but do not have the sales figures to trouble all that much. General Motors, Ford, and to some extent, Chrysler, were praised endlessly for their recovery after the US government had to bail them out. The companies have all increased their quality levels and have been innovating with quality products like the Ford Fusion and Chevrolet Impala standing out. Despite an increase in quality, these brands found themselves lagging behind Toyota when it came to US sales. The revelation was even more startling given that Toyota does not have a major share of the pick-up truck market in the US.
The reason Toyota managed to overshadow its American rivals is partly due to the $1.6 billion compensation plan it offered its customers that were affected by the 2009-2010 unintended acceleration case . It is important to remember that Toyota suffered a huge set back in the US when its vehicles faced mechanical failures that claimed numerous lives. The mechanical failure made vehicles accelerate by themselves, resulting in major damage. The compensation was offered to make up for the monetary losses Toyota's customers faced when their vehicles got damaged due to a mechanical failure.
5 Year Stock Chart:
The 5 year stock chart of Toyota shows that the company has enjoyed rising stock prices even in the face of adversity. The year 2010 is especially important given that it was the year when Toyota was hit hardest by the unintended acceleration crisis. Moreover, the year 2011 is also significant as that was the year when Japan was hit by a powerful earthquake cum tsunami. The years 2013, and the start of 2014 show that Toyota has managed to claw its way onto the top, and this is evident by the rising stock prices.
Comparison with S&P 500:
Toyota is likely to underperform the S&P 500. In addition, Toyota is more volatile than S&P 500. The Potential return rate is also lower than S&P 500. (Buss, 2013)
Works Cited
Buss, D. (2013, August 2). Toyota Tops Global Autos Again Just 3 Years After Slump Began. Forbes. Retrieved February 19, 2014, from http://www.forbes.com/sites/dalebuss/2013/08/02/toyota-tops-global-autos-again-just-3-years-after-slump-began/
Everything about TOYOTA. (n.d.). TOYOTA models & brand history. Retrieved February 19, 2014, from http://www.autoevolution.com/toyota/history/
List of Public Companies Worldwide, Letter - Businessweek - Businessweek. (n.d.). Businessweek.com. Retrieved February 19, 2014, from http://investing.businessweek.com/research/stocks/people/person.asp?personId=1828739&ticker=TM
GM, G. (2013, August 8). Toyota just keeps roaring back. CNNMoney. Retrieved February 19, 2014, from http://money.cnn.com/2013/08/08/autos/toyota-comeback.fortune/
Unintended Acceleration. (n.d.). Consumer Reports Online. Retrieved February 19, 2014, from http://www.consumerreports.org/cro/cars/Unintended_acceleration/index.htm
