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toyota swot

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04/17/2013

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Company Spotlight

MarketWatch: Automotive

Company Spotlight: Toyota Motor Corporation
Toyota Motor has developed a new clear-coat paint with self-restoring qualities that is resistant to surface scratches usually caused by car wash brushes or fingernails. Toyota has said that its newly developed coat is not easily damaged and can even restore itself even if it is deformed. Moreover, it requires no special maintenance, prevents luster degradation caused by surface scratches and helps to prolong new-car color and gloss. The new coat reportedly features an ingredient that encourages closer molecular bonding, resulting in a denser structure than conventionally possible. This gives the coat flexibility and elasticity, making it less prone to damage and more resistant to light and acid, and giving it the ability to self-restore after deformation. Toyota plans to use the coat on the soon-to-be-upgraded Lexus LS full-size luxury sedan.

Business Description Toyota Motor is one of the largest automobile manufacturers in the world. The company is engaged in the design, manufacture, assembly and sale of passenger cars, minivans and trucks and related parts and accessories. The company also provides financing to dealers and their customers for the purchase or lease of Toyota vehicles. Toyota has 50 manufacturing facilities in 27 countries and regions. The company operates through three business divisions: automotive, financial services and other. Toyota produces automotives in two categories: conventional engine vehicles and hybrid vehicles. Toyota’s product line-up includes subcompact and compact cars, mini-vehicles, mid-size, luxury, sports and specialty cars, recreational and sportutility vehicles, pickup trucks, minivans, trucks and buses. Toyota’s subsidiary, Daihatsu Motor Company, produces and sells mini-vehicles and compact cars. Hino Motors, another subsidiary of the company, produces and sells commercial vehicles. Toyota also produces forklifts and several other kinds of materialhandling equipment, such as automatic-guided vehicles, automatic rack systems, power shovels, towing tractors and aerial work platforms. The company sells its products under the Toyota, Lexus, Hino and Daihatsu brands. Under the Toyota brand, the company includes models such as the Camry, the Corolla and the Avensis. Lexus is the luxury car division of Toyota Motor, and is operated as an entity separate from the Toyota brand. Lexus also produces the luxury sports utility vehicle, the RX330. In Japan, the company sells luxury cars under the brand name Crown and the Century limousine. The Prius is the company’s mass-produced hybrid car. Toyota’s subcompact and compact cars include the four-door Corolla sedan, which is one of Toyota’s best selling models. The Yaris, marketed as the Vitz in Japan, is a sub-compact car, designed particularly for European consumers. The company’s sport-utility vehicles and pickup trucks include the Tacoma and Tundra pickup trucks. Toyota’s models for the minivan market include the Alphard, Sienna, Estima, Hiace, Regius Ace, the Noah and the Voxy. In FY2008, the company recorded total sales of 8,913,939 units, as compared to the unit sales of 8,524,659 units in 2007. Out of the total sales, the company sold 2,958,314 vehicles in North America; 2,188,389 vehicles in Japan; 1,283,793 vehicles in Europe; 956,509 in Asia; and remaining 1,526,934vehicles in other countries. Furthermore, the company produced a total of 8,547,200 units in FY2008, as compared to 8,180,951 units in FY2007.

© Datamonitor, N o v e m b e r 2 0 0 9

www.datamonitor.com - 13 -

9% of Toyota’s finance receivables were derived from financing operations in North America. The majority of Toyota’s financial services are provided in North America. a full service telecommunications provider in Japan.co. 2008.4billion). 4.Company Spotlight MarketWatch: Automotive Toyota’s financial services business provides finance to dealers and their customers for the purchase or lease of Toyota vehicles. 12. approximately 61.4% from other areas. Toyota Finance (TFC) in Japan and Toyota Motor Credit (TMCC) and other overseas subsidiaries and affiliates provide sales financing for Toyota's products and the products of its subsidiaries and affiliates.com. 2007. The company also designs and manufactures prefabricated housing and handles information technology related businesses. including certain intelligent transport systems and an e-commerce marketplace called Gazoo. At the end of March 31.6% from Japan.14 - . representing an increase of approximately 2.7% as compared to the amount outstanding as of March 31. Toyota’s network of financial services currently covers 32 countries and regions. During FY2008. the company’s net finance receivables outstanding for all of Toyota’s dealer and customer financing operations were approximately JPY10. Toyota currently holds around 12% ownership interest in KDDI.datamonitor.jp 81 565 28 2121 TM 2. 13. Toyota’s financial services also provides retail leasing through the purchase of lease contracts originated by Toyota dealers. Key facts Address Major products & services Automotive Mini vehicles Mid sized cars Luxury cars Recreational and sport-utility vehicles Brands Daihatsu Toyota Lexus Hino Website Telephone New York ticker Turnover (JPYm) Employees Financial year end Toyota Motor Corporation 1 Toyota-cho Toyota city Aichi Prefecture 471 8571 JPN http://www.6 316.1% from Europe.com . N o v e m b e r 2 0 0 9 www. Furthermore.3 trillion (approximately $90.toyota.0% from Asia and 8.121 March © Datamonitor. The company’s ‘other’ segment includes its operations in telecommunications.

Company Spotlight MarketWatch: Automotive SWOT Analysis Table: SWOT Analysis Strengths Strong financial performance Brand image Strong performance in Asia region Research and development activities Toyota production system Opportunities Increasing demand for hybrid electric vehicles Opportunities in Asian market New models Source: Datamonitor Weaknesses Poor profitability of ‘financial services’ segment Expenses related to post retirement benefits for employees Threats Competition in the global automotive market Tightening emission standards Appreciating yen against the dollar © Datamonitor. N o v e m b e r 2 0 0 9 www.com .datamonitor.15 - .

5%.356m (approximately $2. to reach $34.790. Toyota’s luxury car.666. Similarly.637 units in 2007. Honda.879m (approximately $15.240m (approximately $230. from the net profit of JPY1.032.Company Spotlight MarketWatch: Automotive Strengths Strong financial performance The company has recorded a strong financial performance in recent years. the average operating profit margin and net profit margin of the company stood at 9. Ford has been faced with a number of troubles. the company registered strong growth in its profitability position. © Datamonitor. The net profit of the company grew at a CAGR of 10.296. The company’s operating profit grew at a CAGR of 8.981. According to the survey. The revenues of the company in this region grew at a rate of 41. The operating profit of the company from Asia increased to JPY256. It is ranked well ahead of its competitors like Mercedes. from JPY17. Lexus.987m (approximately $24.1 billion in 2008. The brand value of Lexus was around $3.270. In the annual ranking of top 100 global brands by BusinessWeek and Interbrand in 2008.com . BMW.2m) in 2007 to reach JPY2. the production in Asia also increased by 27.203m) in 2004 to reach JPY1.186. subsequently. Increasing vehicle sales and operating profits in the Asian region indicate an opportunity for the company to consolidate its operations in this emerging automotive market.624m (approximately $26. Sienna. respectively. Brand image Toyota is one of the leading automotive brands in the world.509 units for the financial year ended March 2007.250. Camry.6 billion.datamonitor.1% during 2004–08.848m) in 2004 to JPY26.8m) in 2008 from JPY117. Prius and Scion.179m) in 2007. the cash from operating activities grew at a CAGR of 8. the brand value of Ford fell by 12%.9m) for the FY2008. Hyundai.934m) in 2008.760m (approximately $151. Toyota figured in the sixth position. as well as in international markets. During 2004–08. The strong financial performance of the company has contributed to its market dominance.595m (approximately $1.635m) in 2004 to JPY2. to $7. Porsche and Nissan.The company also witnessed significant growth in profitability.1% from JPY2. Some of the other popular product brands of the company include Corolla.3%. from the unit sales of 789.16 - . Furthermore.957m (approximately $17.000 vehicles in 2008. The company registered favorable sales in Indonesia and increased its production capacity in Thailand responding to the increase in demand for IMV models (Hilux and Fortuner) from outside Asia. and become a leading player in this region.1% and 6. with a ranking of 90.717. from JPY1. For instance.098m (approximately $10. Furthermore. This.504. including a failure to meet its goals for SUV mileage gains or to exploit its well-regarded Escape hybrid.969. it is the highest ranking automotive brand name in the world.375m (approximately $19.820m) in FY2008. Furthermore. The company’s strong brand image gives it significant competitive advantage and helps the company to register higher sales growth in domestic.162.3% to reach 961.9 billion in 2008.890m (approximately $14.200m) in 2004 to JPY2.The vehicle sales of the company in the Asian region increased by 21% to reach 956.294. Toyota's brand value has surged by 6%.5m) in 2007. Ford.7%.3% from JPY1. in turn. N o v e m b e r 2 0 0 9 www.289. also has an independent ranking in the top 100 global brands.734m (approximately $19. Toyota Motor’s revenues increased at a compound annual growth rate (CAGR) of 11.083m) in 2008. in the same period. Strong performance in Asia region Toyota Motor registered strong business growth in the Asian region. enhances investors’ confidence in the company.

5 billion) in FY2008. Furthermore. a fuel cell hybrid vehicle which can start and operate in cold regions at temperatures as low as -30 degrees Celsius. the company developed Toyota FCHV.com . some of the leading companies like GE. © Datamonitor.000 engineers and technicians for its R&D activities. The strong R&D capability enables the company to build a broad range of vehicle portfolio and improves its competitive strength in the automotive industry. This system helped Toyota to build quality into the production process by avoiding defects and preventing the waste in its manufacturing operations. vehicle safety.8 billion) in 2007 and JPY813 billion (approximately $7. Bayer. in May 2008. the company has come up with new innovations across product categories such as hybrid vehicles. Toyota production system Toyota developed the internationally recognized production system known as the Toyota Production System (TPS) to achieve mass-production efficiencies even for small production volumes.Company Spotlight MarketWatch: Automotive Research and development activities Toyota Motor has strong research and development (R&D) capability. JPY891 billion (approximately $7. Through Jidoka (an automation process used in the manufacturing operations). the total R&D costs of the company stood at JPY959 billion (approximately $8. Just-in-time is a production method through which the company plans to manufacture and deliver necessary parts and components in the right quantity in a timely manner and allows the company to maintain low levels of inventory. fuel cell hybrid vehicles. it improved the company’s brand image. across the world adopted the TPS to improve the efficiency of their manufacturing operations. information technology and product development. Furthermore. In recent years. gasoline engines and diesel engines. The TPS is based on the just-in-time and Jidoka principles.datamonitor.1 billion) in 2006. Furthermore. the company can stops the work immediately when problems arise in its production process to prevent the manufacturing defective products. The company incurred large expenditure for its R&D activities. the company employed nearly 34. For instance. electric vehicles.17 - . The company’s R&D activities focus on the environment. For instance. N o v e m b e r 2 0 0 9 www.

resulting into an unfunded status of JPY411.18 - .281. Continued poor profitability of the financial services division is likely to pull down the overall financial performance of the company.895.3 billion (approximately $122.Company Spotlight MarketWatch: Automotive Weaknesses Poor profitability of ‘financial services’ segment Toyota’s financial services segment’s operations mainly include loans and leasing programs for customers and dealers.7% to reach JPY1.3 billion (approximately $285 billion) as of March 2008. which stood at JPY32. by the end of March 2008.4m). The company recorded the operating profit of its financial services operations at JPY86.155m (approximately $14.494m (approximately $759.1m).3% from the operating profit of JPY145. the total assets of the financial services operations of the company stood at around JPY13.4m) for the FY2008. N o v e m b e r 2 0 0 9 www.609. representing a compounded annual decline rate of 12. the revenues of the company from this operating division grew at a CAGR of 19.datamonitor.107m (approximately $3.476m (approximately $671. For instance.048m (approximately $11. During 2004–08.9m) as compared to the planned assets of JPY1. The company’s ‘financial services’ segment witnessed poor operating performance in the last five year period. the company's projected pension and post-retirement benefit obligations stood at JPY1.5m). The company also paid a total of JPY76.865. constituting 43% of the company’s total assets. Expenses related to post retirement benefits for employees Toyota Motor provides pension benefits and other post-retirement health and life insurance benefits to employees.com .282. During the FY2008. Although the revenues grew at a higher rate.5m) for the post retirement benefit plans during 2007. Furthermore.4m) in 2008. With operations across the world.458.693.9m) in 2004. which would reduce cash available for growth plans.998m (approximately $1. Sizeable unfunded post retirement benefits would force the company to make periodic cash contributions towards bridging the gap between post retirement benefits obligations and planned assets.468. the company incurred post retirement benefit expenses of JPY80.4 billion).761m (approximately $709.730m (approximately $12. the operating income from this division declined significantly. © Datamonitor.942. the ‘financial services’ segment consumes considerable resources of the company.256.

19 - .5 million in June 2008. is an important joint venture for the company in China. Toyota decided to construct a second plant in India with an annual production capacity of 100. in January 2008. a joint vehicle production and sales company established with Guangzhou Automobile Group.5 million units during the same period. The company’s emphasis on hybrid technology will enable it to capitalize on the positive market trends in this segment to enhance its market position.3 million units to 2. the company operates Toyota Kirloskar Motor (TKM) to design. Furthermore. manufacture and market automobiles. the company started the production of new Corolla at Tianjin FAW Toyota Motor plant in May 2007. Guangzhou Toyota Motor Company (GTMC). new car production in China is expected to increase from 6. The company aims at expanding its model line up in China.3 million units in 2007 to 9. held at the new China International Exhibition Center in Beijing.000 units. The strong manufacturing and marketing operations in Asian markets would help the company to achieve higher market share in this growing market. Furthermore. The primary markets for HEVs will be within Triad countries (the US. Furthermore. The iQ was specifically designed to reduce CO2 emissions and realize higher fuel efficiency. The cumulative total of Toyota Motor’s hybrid vehicle sales reached 1. China. Opportunities in Asian market The Asian automobile market is expected to drive global demand for light vehicles through much of this decade. Cost disparities between HEVs and conventional light vehicles are expected to decline as production volumes increase. Toyota Motor is keen to capitalize on the growing demand for hybrid electric vehicles. The company is taking significant steps towards increasing its presence in the Asian markets. Toyota Motor operates seven joint ventures and two wholly-owned foreign enterprises. In India. For this. India and Association of South-East Asian Nations (ASEAN) countries are the major driving markets for the Asian automotive industry.4 million units in 2012.Company Spotlight MarketWatch: Automotive Opportunities Increasing demand for hybrid electric vehicles Worldwide demand for light hybrid electric vehicles (HEV) is estimated to reach 4. N o v e m b e r 2 0 0 9 www. although the rapidly growing Chinese market is also expected to experience relatively strong demand for these fuel efficient and environmentally friendly vehicles. Indonesia and Malaysia. For instance. as hybrid engines are more fuel efficient and less polluting than conventional gasoline and diesel engines. Rising energy costs and increased emissions regulations are likely to increase the demand for HEVs. This plant is scheduled to commence production of the Corolla and other passenger vehicles such as newly developed compact cars in 2010. and Yaris at Guangzhou Toyota Motor in May 2008. The company also launched models such as the Prius and LS600h hybrids at the 2008 Beijing International Automotive Exhibition. Western Europe and Japan). Toyota Motor announced its plans to commence sales of lithium-ion batteryequipped plug-in hybrid vehicles to fleet customers in the US and elsewhere by 2010. In China. while new car production in India is forecast to increase from 1. the company plans to introduce demand-creating products. the company is also looking to increase its production capacity in countries like Thailand. Furthermore. the company plans to expand its hybrid lineup and achieve annual sales of one million hybrid vehicles by early 2010. For instance.0 million units by 2015.com . For instance.datamonitor. © Datamonitor. The company has spent a large amount of money for the development of hybrid vehicles over the years. the company scheduled to launch the iQ ultra-efficient package vehicle in Japan and Europe in 2008.

Toyota Motor developed Toyota FCHV. new models will also help the company to revamp its aging model line up. the company launched its redesigned Alphard (a luxury multi-purpose vehicle) as two different vehicle series. held at the new China International Exhibition Center in Beijing. in April 2008. Besides helping to garner additional revenues.datamonitor. Furthermore. a fuel cell hybrid vehicle. Toyota Motor displayed a total of 50 concept vehicles at the 2008 Beijing International Automotive Exhibition. N o v e m b e r 2 0 0 9 www. along with concept cars such as the iQ compact and the personal mobility vehicle ‘i-REAL’.Company Spotlight MarketWatch: Automotive New models Toyota Motor launched several new models in FY2008.com . In the following month. The company also displayed models such as the Prius and LS600h hybrids and the GOA (Global Outstanding Assessment) collision-safety body represented by a Camry and Crown models. For instance. © Datamonitor.20 - . The company launched its models including the compact Yaris. in June 2008. China. the new Vios and Lexus LX570 SUV. which can start and operate in cold regions at temperatures as low as -30 degrees Celsius. the ‘Alphard’ and the ‘Vellfire *2’.

the dollar and the euro. For instance. while the state of Maine adopted the ZEV regulation as of the 2009 model year. In recent years. A more stringent emission standard (EURO 5) is also on the table of the EU legislative bodies and is likely to be effective from 2009. customer service and financing terms. South Korea adopted the enforcement regulation of the Special Act on Capital Region Air Quality Improvement. some manufacturers shall be required to sell low emission vehicles which meet a more stringent emission standard than those meeting the national standard. In addition. The factors affecting competition include product quality and features. Appreciating yen against the dollar Toyota is sensitive to the fluctuations in foreign currency exchange rates and is principally exposed to fluctuations in the value of the yen. are affected by foreign currency exchange fluctuations. Massachusetts and Vermont adopted the California Zero Emission Vehicle (ZEV) regulation. These regulations are similar to EURO3 and EURO4. Similarly. which. the yen appreciated significantly against the dollar. which may in turn affect the valuation of the company. if adopted. In Australia. which are then converted to yen.China adopted Step3 and Step4 emission regulations for light-duty vehicles in 2005. Under the directive. which are presented in yen. would become mandatory around 2014 or 2015. The strengthening of the yen against the dollar can have a material adverse effect on Toyota’s reported operating results. 2008) stood at $1=JPY106.com .datamonitor. safety.Company Spotlight MarketWatch: Automotive Threats Competition in the global automotive market The worldwide automotive market is highly competitive. the average exchange rate for the whole of FY2008 was JPY114.The emission standards adopted across various regions can result in additional costs for product development. manufacturers will be responsible for the emission performance of these vehicles for five years or 100. The state of New Jersey will adopt the ZEV regulation starting from 2009. Step3 was implemented from 2007 and Step4 will be implemented in 2010. a decrease of 11% (per $1) over the first half of FY2008 (whose average was $1=JPY119. © Datamonitor. Tightening emission standards The European Union (EU) Commission and the EU Parliament have adopted a directive that establishes increasingly stringent emission standards for passenger and light commercial vehicles for model years 2005 and thereafter (known as EURO 4).1. EURO4-equivalent regulation was implemented in July 2008.3 to $1. testing and manufacturing operations of Toyota. N o v e m b e r 2 0 0 9 www. 2008 to September 1. fuel economy. the average exchange rate for the yen in the first half of FY2009 (from April 1. The changes in foreign currency exchange rates may affect Toyota’s pricing of products sold and materials purchased in foreign currencies. which may result in a further downward price pressure and adversely affect the company’s financial condition and results of operations. Increased competition may lead to lower vehicle unit sales and increased inventory. The competition among various auto players is likely to intensify in light of continuing globalization and consolidation in the worldwide automotive industry.21 - . Toyota’s consolidated financial statements. the amount of time required for innovation and development. whichever occurs first.3). which is significantly higher to the average exchange rate for the first half period of FY2009. reliability.000 kilometers. several Asian countries adopted regulations which are similar to EURO2 and EURO3. pricing. Accordingly. In 2005. Most of the company’s business transactions are conducted in dollars. The EU Commission intends to define even more stringent emission standards (EURO 6). Toyota Motor faces strong competition from automotive manufacturers in its various markets. the states of New York.

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