|Name||Toyota Motor Corporation|
|Revenue||$249.4 billion (2021)|
|Profit||$2.245 billion (2021)|
|Competitors||Honda, Chrysler, Ford Motor Company, Chevrolet and Volkswagen|
Headquartered in Aichi, Japan, Toyota Motor Corporation, commonly known as Toyota, is a company that produces and sells automobile vehicles and their parts. The production from designing to manufacturing assembling is done by Toyota, which sells passenger cars, minivans, trucks, and other car accessories and parts. The Japanese-based motor vehicle company is an incumbent leader in the global car sales manufacturing industry. Despite the pandemic crisis, the company was able to sell approximately 5.5 million units making Toyota the least impacted company compared to its competitors (Carlier, 2021). Let’s now go over the detailed SWOT Analysis of the company.
Toyota Strenghts 2021:
- Brand Equity.
Toyota has acquired the spot for being the most relevant and the most valuable automotive company in the industry globally. The company earned this title after overtaking Mercedes-Benz in brand value by 2% in 2021 (News18, 2021).
- Product Innovation into Hybrid Vehicles.
The sudden boost seen in Toyota’s brand value is due to their growing market. Toyota has made an active effort to innovate and tap into advanced technology by providing eco-friendly vehicles and hybrid vehicles. Toyota’s list of hybrid vehicles includes Prius, Toyota Corolla, Camry Hybrid, etc., (Brand Finance, 2021). There have also been reports of Toyota investing in autonomous vehicles and robotic technology start-ups (Turner, 2019).
- Market Presence.
The company has numerous operating stores worldwide. Its market segments include; China, Europe, Asia Pacific, North America, Latin America, Africa, Middle East, and Oceania, while also having 71 production facilities established globally. In the current year, the company has had sales in over 170 countries and regions (Toyota, 2021). According to Carlier (2021), among the global automobile industry, Toyota also held the title of having the highest market share of 8.5% in the year 2020 (See Figure 1).
- Brand Loyalty.
The largest market share of Toyota is a credit to its customer base, which the company has retained for a longer run. According to a study carried out by JD Power (2021), Toyota comes in second in terms of brand loyalty, just under Subaru at 61.1%. Further, its brand Lexus ranks at number with a score of 51.6% on premium brand ranking
- Customer Satisfaction.
Toyota has been leading the industry by its customer relationship management (CRM) operations. Industrial reports indicate that the company has been exceptionally sensitive to customer needs and understanding its target market behavior in terms of experience, emotional connection, and customer ethos. The Japanese Corporation also managed to earn the 19th position in customer satisfaction, competing with only two other Japanese brands in the top 50 ranked lower than Toyota (Prez, 2020).
Toyota Weaknesses 2021:
- Recalls Leading to Loss of Brand Reputation.
Recently, Toyota published a press release recalling 5.84 million vehicles collectively worldwide due to a fuel pump defect. The recall included vehicles of Toyota manufactured from 2013 to 2020 (Shepardson, 2020). The brand said vehicles might stop functioning and could also lead to the vehicle slowing or stopping overtime with no guarantee of working again. This could lead to brand damage and the negative reputation of Toyota in the marketing, leading to loss of customer trust.
- Increasing Labor Costs in Headquarter Region.
Labor costs in Japan have been rising over the years, posing a challenge for Toyota as it is the headquarter region. For example, in the year 2021, labor costs in Japan have increased to ¥930 per hour; this is a ¥28 increase from 2020 (Press, 2021). This leads to increasing costs and reducing profit.
- Weak position in India.
India being an emerging market provides Toyota with a huge opportunity to expand in this region. However, the country has a high fiscal regime; therefore, Toyota has decided not to expand further in India. It puts the company at a major step back because its competitors, such as Suzuki, thrive in this region (Bloomberg, 2020).
Toyota Opportunities 2021:
- Innovation in Technology.
Given that Toyota is largely expanding in new, innovative technology such as fuel-efficient cars and self-driving cars, the next project for Toyota to capitalize on can be the flying car technology. SkyDrive, a Japanese-based start-up, is launching the first manned test flight of its flying car (Lyon, 2020). This creates investment and collaboration opportunities for Toyota.
Toyota has proved to be a market leader in the automotive sector. Hence now the company can invest and improve its product portfolio to be less risk-averse. Diversification can be in industries like nanomaterials where the company has recently invested (Ehlinger, 2020).
- Collaborations in India.
Toyota has collaborated with brands that hold a similar brand reputation. This has allowed the company to expand the business and achieve a greater target market. Hence in India, to establish a strong foothold, the company has numerous opportunities to collaborate with sellers and manufacturers to make it a profitable segment.
Toyota Threats 2021:
- Aggressive Competition from Innovative Automobile Brands.
Toyota faces competition from other automobile brands such as Ford, Chevrolet, Honda, Nissan, etc. However, the company’s highest competition comes from the leading innovative automobile companies such as Tesla, which disrupts the market with its autonomous automobile technology (Stevens, 2020).
- Rise in fuel prices.
A rise in fuel prices poses a threat to the sales of an automobile company. One of the major market segments of Toyota, the UK, and other related regions are facing an increase in fuel prices. Fuel prices in the UK have reached an all-time high in the last eight years, and it is predicted that prices will continue to increase. The price of petrol jumped from 135.9p to 136.6p over the course of 3 days (Wearden, 2021). Rise in petrol automatically reduces the demand for vehicles, which recently happened amidst the pandemic crisis.
Toyota SWOT Analysis Conclusion:
Overall, Toyota Motor Corporation has been a major player for a long time now, making it one of the most valuable automobile industries. The company has been a global leader for quite some time and performed better during the pandemic crisis than its competitors. The company has a prominent market presence in UK and Japan. On the other hand, its position in emerging markets such as China and India is weak. The mass number of recalls in recent years has also affected the company’s image and will ruin its reputation in the coming years. However, the company can capitalize on opportunities, such as investing in autonomous vehicles and collaborating with other prominent brands to maintain their brand image and maintain their position in the market alive to compete with Honda, Ford, Tesla, etc.
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- Blomberg. (2020). Toyota says it won’t expand further in India, blames ‘we don’t want you’ taxes. Economic Times.
- Brand Finance. (2021). Toyota overtakes Mercedes as the world’s most valuable auto brand. Brand Finance.
- Carlier, M. (2021). Leading carmakers worldwide – global brand market share 2020. Statista.
- Ehlinger, M. (2020). Carbice Raises $15 Million Series A to Bring Nanomaterials to Your Phone and to Space. Hypepotamus.
- Forbes. (2021). Toyota Motor. Forbes.
- JD Power. (2021). Effects of lockdown keep vehicle owners locked in on their current brand. JD Power.
- Lyon, P. (2020). Flying Car Takes Off in Japan with First Manned Test Flight. Forbes.
- News18. (2021). Toyota becomes the most valuable car brand: check top 10 brands here. News 18.
- Press, J. (2021). Japan’s hourly minimum wage rise to 930 yen. The Japan News.
- Prez, M. (2020). Toyota is the highest-ranking automotive brand for customer satisfaction. AM Online.
- Shepardson, D. (2020). Toyota recalling 5.84 million vehicles for fuel pump issue. Reuters.
- Stevens, P. (2020). Tesla Tops Toyota to Become the Largest Automaker by Market Value. CNBC.
- Toyota. (2021). Where do We Come From. Toyota
- Turner, A. (2019). Toyota to Invest $100 million in self-driving and robotic technology start-ups. CNBC.
- Wearden, G. (2021). UK petrol prices at highest level since 2013, with more rises expected. The Guardian.