Toyota Motors: A Japanese Multinational Automaker in China

Case Code: BSTR465 Case Length: 15 Pages Period: 2005 - 2014 Pub Date: 2015 Teaching Note: Not Available

Price: Rs.400 Organization: Toyota Motors Industry: Automotive Countries: China Themes: International Management, Emerging Markets, Geo-political Tensions

Abstract Case Intro 1 Case Intro 2 Excerpts

Introduction

In April 2013, the Japan-based Toyota Motor Corporation (Toyota) announced that it would give its Vios and Yaris models a makeover specifically to target the no-frills entry-level segment in China. "We have not made sufficient progress with the car [Vios and Yaris] in China. We tried to give (the models) a proper "daqi" stance typical of what Chinese consumers look for, and we improved fuel efficiency," said Hiroji Onishi, head of Toyota's China operations. However, industry experts were still unsure whether Toyota had learnt a valuable lesson about the importance of localization. "Gradually, Toyota is getting around to filling the gap in its low-cost small car line-up in China. But it's still doubtful that the new car's going to be a runaway success like GM's Sail and Nissan’s Tiida," said Masaki Taketani, director of research firm IHS Automotive.

Toyota entered China in the early 1930s. While the company initially sold cars imported as completely built units, it began full-scale passenger car production in China by 2000. Over the years, Toyota entered into agreements with several Chinese automobile companies and established the Toyota brand in China. As of 2014, Toyota was one of the leading brands in the country. In 2013, though Toyota sold 917,500 cars in China, it missed its target of selling 1 million cars a year in the world’s biggest automobile market. In 2004, Akio Toyoda, President of Toyota, had set the goal of selling one million cars a year in China by 2010. However, Toyota was not able to surpass that sales figure in China. Nevertheless, 2013 was a record year for Toyota China as it boosted deliveries 9.2 percent. This signified a recovery for the automaker from the consumer backlash it faced in the country due to a territorial dispute between Japan and China. In 2012, the backlash led to Toyota losing sales by 4.9 percent. As of 2014, Toyota was relying on its revamped Vios and Yaris models to cross the 1.1 million unit mark in China. According to Takanori Yokoi, Toyota's Beijing-based spokesman, "The bottom line: the best thing for us as an auto maker to do in China, and in any market for that matter, is to keep making efforts to come up as quickly as possible with the kind of cars consumers deem desirable and want to embrace.".....

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