Question

QUESTION 2

CASE: TOYOTA’S EUROPEAN DRIVE

Toyota, the largest auto manufacturing company in the world, sells vehicles in 170 countries and regions, has 54 manufacturing companies in 28 countries and regions outside of Japan, and has R&D facilities worldwide. In Europe, Toyota has manufacturing facilities in six countries, including France where the Yaris is manufactured. It also has R&D facilities in Belgium, the U.K., Germany, and France.

So why has it taken Toyota so long to crack into the competitive European market, and why are European companies only now beginning to feel the pressure from Asian manufacturers? Many analysts have pointed to an agreement between the Japanese government and the European Community (predecessor to the European Union) in which the two negotiated a quota each year for the number of Japanese cars imported into Europe. When the quota system and other restrictions were lifted in 1999, Toyota responded by establishing a European Design and Development centre in southern France and capturing distinct cost advantages by setting up additional production centres in East Europe. Toyota’s European market share and profitability began to grow steadily.



Riding on its success in Europe in the mid-2000s and its growth internationally, Toyota had ambitious goals for the future. However, the global financial crisis and the ongoing difficulties posed by

international recalls of more than 9.5 million vehicles have put a crimp in those plans. In addition, the 2011 earthquake and tsunami in Japan severely disrupted Toyota’s supply chain. By 2015, Toyota had only 4.2 percent of the European market, well behind market leader VW with 24.9 percent.
(a) Why did the Europeans to try to protect their auto industry from Japanese imports and do you think this was fair to European consumers? (b) What has Toyota done to be more successful in Europe, and why do you think it has not been more successful? What else can it do?

Total: 20 marks

Answer 1

a) Europeans tried to protect their markets from Japanese imports. This is because of the affordability of Japanese imports and the variety and dynamics associated with the Opani products. Toyota has emerged as a strong competitor to European companies in European markets. Toyota dominated Europe with cheap imports. This threatened companies like BMW and Mercedes-Benz. Another reason why Europeans decided to limit Toyota's imports was because Toyota's production costs were so low that they thought it would go to Europe and seize their market. And Toyota made huge profits.
Diversification and aesthetics, as well as the variety of colors, have become a threat to European cars. The high-end European car was not a favorite in the Japanese market. Moreover, the Japanese customer has become more cooperative with the domestic market.

b) Toyota has successfully marketed it in Europe. Toyota's success in Europe is mainly due to the fact that Toyota has adopted a strategy of building specially designed vehicles for European customers. It was designed and built in the variety they wanted, in different designs and colors. Another key tactic was to sell Toyota products at lower prices. Toyota has imposed lower prices than Europe's big cars. This made it attractive to people. The company was able to make good profits by lowering Toyota's manufacturing costs.Toyota has increased the car's fecility. Another attraction was the low fuel consumption. The company has made many changes in its operations and operations to suit the tastes and preferences of its customers.

But the Toyota Iife has not had much success in Europe. Global economic Crisis affected negatively to this company. Due to weak brand recognition and increased customs tariffs, the operation has become more expensive. The 2011 tsunami in Japan severely affected Toyota.

The key to Toyota's success is to build eco-friendly vehicles, develop self-driving cars, build electric or solar vehicles, do research in foreign markets and organize the product accordingly.