Toyota Case Study

Toyota Case Study

1- How do you explain the success of Toyota on the European Market?

Previously Toyota presented several defects for the European consummators. The design was not nice, the options were limited, etc. Nevertheless, over time Toyota has adapted to the global marketplace.

The success of Toyota depends on several factors, first of all the modification of the regulations between what is now known as the European Union and Japan has opened the way for Toyota to invest heavily in what could help them to reach the European market and become a major player in it.

A huge investment has been made for design and facilities in Europe, to broaden the range of products they marketed there, and to customize their offering to better appeal the European tastes.  

This strategy allowed Toyota to win the car prize of the year in 2000 with its model Yaris, which was the proof and the image of Toyota, a Japanese company, which to reach a new market, adapts to the culture of the new market and integrates and always seeks to satisfy its customers with a design and options that they look for in a car.

Another element that has contributed to Toyota's success is the establishment of a production center in the European region and produces and designs cars that will be sold in Europe. Toyota Corolla voted car of the year in 2002, was produced and designed in Europe.

Success is also due to another factor that is not directly related to the business. European consumers are less and less loyal to local brands, making the European market even more attractive for Toyota.

2- Why did the EU loosen its restrictions on imported Japanese cars?

The European Union and Japan signed a trade pact that will reduce EU tariffs on Japanese cars.

Japanese automakers could increase their sales to Europe, where they have lagged European rivals. this agreement was very beneficial for Japanese car producer, indeed Toyota is the third largest manufacturer of automobiles in units sales, and it’s also the most profitable.

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The agreement will make it easier for European and Japanese firms to invest in each other's markets, so more Japanese companies might invest in Europe or set up production in the EU, Japanese investments have been more successful. While European manufacturers lost 1,2% market share, Asia’s five largest manufacturers, recorded gains ranging from 12 to 30 percent.

3- Why did it take Toyota so long to succeed on the European market?

As the automobile industry is very capital intensive, Toyota wanted to continue pursuing economies of scale and scope. In addition to that, even though only a modest percentage of the cars sold in Europe were manufactured there, only 20 production facilities were present in the whole Europe.

Europe was still the second largest foreign market for Toyota. In this case Toyota did not see it as a pressing issue to move manufacturing locally, and for that moment it worked well enough.