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Toyota Motor Corporation (Japan)

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Toyota finally toppled General Motors to become the world's biggest carmaker in 2008. Its namesake brand was already the global top-seller, a position it still holds. However, a series of problems, not least the tragic 2011 Japanese earthquake, caused group sales to slump alarmingly at the turn of the decade. Toyota regained the #1 position once again in 2012, before being overtaken in turn by Volkswagen Group in 2016. The company retains a firm grip on its home country with controlling stakes in fellow carmaker Daihatsu and leading truck manufacturer Hino, and combined market share which hit 45% in the year to 2017. Above all, though, Toyota is keen to establish itself as a global motor manufacturer not a Japanese exporter. It has taken care to adapt its products to local tastes with region-specific cars like the Camry in the US and Avensis and Corolla in Europe, and has worked hard to shift the majority of its non-domestic production outside Japan. Never one to rest on its laurels, Toyota has consistently pushed into new areas, the most notable of which was its pioneering success with the Prius fuel-electric hybrid. Yet not even the best-run of the world's auto manufacturers was able to withstand the impact of the sudden decline in the global car industry from 2008 onwards. This led to a substantial loss for the financial year, the first in Toyota's history. Potentially more damaging, though, were serious lapses in quality control which prompted a massive vehicle recall in 2010, and a criminal investigation by a US federal grand jury. Ultimately no technical faults were proven, but Toyota's reputation was sullied by the whole affair and it received a $1.2bn fine for failing to cooperate with investigators.


Who handles Toyota's advertising? Click here for agency account assignments for Toyota from adbrands.net. The company declared advertising costs for the year ending March 2017 of Y448.8bn ($4.1bn).

Brand Value

Interbrand's Best Global Brands survey ranked Toyota as the world's #7 most valuable brand overall in 2017, and the #1 auto brand, with an estimated brand value of $50.3bn. Millward Brown's Brandz survey ranked Toyota as the #30 overall (but #1 auto), with an estimated value of $28.7bn. Both surveys use different measurement criteria.


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Brands & Activities

"The car in front is a Toyota", claims the marketing. That's been true in spirit for some time, and now the numbers generally prove it. The group seems to have an unfailing sense of what car buyers will want next, from urban runarounds to environmentally friendly hybrids, and it brings those models to market with the utmost efficiency. Never the most stylish or innovative of manufacturers it is nonetheless admired by its peers for the general dependability of its cars, its strong and efficient management and steady, relentless growth. Only Toyota's comparative weakness in the ever more important Chinese market counts against it. It also has a low profile in Latin America.

Rapid growth also arguably led to lapses in quality control and this culminated in the 2010 crisis when problems associated with its accelerator pedals forced the company to make an unprecedented vehicle recall and promoted a federal inquiry in the US. Another setback was the natural disasters of 2011 and 2012 which afflicted all Japanese manufacturers.

Global Sales

Toyota Corporation remains one of the world's most successful auto manufacturers. During the collapse of the global car market in 2008, Toyota was less badly affected by its main rival General Motors, allowing it to seize the crown as global #1 for the first time with sales for calendar 2008 of 8.97m, down 4% on the previous year, but still high enough to beat GM, whose sales fell by 11% to 8.4m. Despite the effect of a massive vehicle recall, it retained that crown in 2010, but the impact on local manufacturing caused by Great East Japan earthquake in March 2011 pushed the group back into the #3 position for that calendar year.

Since then, though it has recorded steady growth. Toyota reclaimed its position as the global #1 for calendar 2012, and retained that title in 2013 with an increase to 9.98m units, just short of its 10m target. The German group looked certain to overtake Toyota in 2015 until its Dieselgate crisis impacted on sales towards the end of the year. Finally Volkswagen achieved its goal for 2016, pushing Toyota back into second place. For calendar 2017, Toyota remained in second place with a total of 10.18m vehicles, behind Volkswagen Group's 10.38m.

The group's biggest brand by far is the main Toyota passenger car and light commercial range. It remains the world's best-selling car brand by a considerable margin, with registrations of over 8.71m vehicles worldwide in 2017 (almost 2m more than the Volkswagen brand). Its Corolla compact passenger model is the world's top-selling car, and was the first ever to sell more than 1.3m units in a single year in 2015. Sales for 2017 were 1.22m. Only one other car sold more than 1m units (Ford's F-Series pick-up). Toyota's RAV4 SUV was the global #5 at 807k units. Other key models include the Camry sedan (650k), Hilux pickup (498k), Yaris small car (373k), Highlander crossover (342k) and Prius hybrid (264k).

Toyota also controls or part-owns a group of other Japanese auto manufacturers. Daihatsu manufactures a complementary range of compact passenger cars and mini-vehicles, mostly for the Japanese market. In early 2016, Toyota bought out the 49% of that company it didn't already own. Hino, in which Toyota has a 50% shareholding, is one of the country's leading makers of heavy trucks and buses. In 2005, Toyota acquired a shareholding of just under 9% in Fuji Heavy Industries, maker of Subaru cars, after GM sold its own 20% stake, and it increased this holding to 16.5% in 2008 as part of a deal to jointly produce a new compact sports car. Toyota also has a capital partnership with Isuzu in order to have access to the smaller company's technology for low-pollution diesel engines. In a further extension of its influence in the domestic market, it agreed terms for a strategic alliance with Suzuki to cooperate on R&D, environmental and safety technologies.

The group operates around 50 manufacturing businesses in 27 countries around the globe. Most manufacturing operations are wholly owned, although the company has a joint venture in the Czech Republic with Peugeot Citroen, as well as two partnerships in China with local manufacturers. In 2009, Toyota agreed an alliance with UK-based luxury sports car manufacturer Aston Martin to supply its Japanese iQ ultra-compact for sale in Europe as an entry-level Aston Martin model, the Cygnet. However, a long-standing joint venture in the US with General Motors, known as NUMMI, which makes passenger cars for Toyota and light trucks for GM, was discontinued during 2009, and was sold the following year. The group has seven of its own wholly-owned manufacturing facilities across the country and also produces Camry vehicles at Subaru's local plant in Indiana.

Individual Markets

The company has held the position of America's best-selling manufacturer of passenger cars since 2003, and an increase in sales of light trucks in 2007 secured it the position as the overall local leader in vehicle sales for the first time, ahead of Chevrolet and Ford. Volumes peaked that calendar year at a record 2.62m vehicles. The group retained the #1 position in 2008, despite a 16% decline to a total of 2.2m units sold, but slipped back behind GM in 2010. Negative publicity, the grim economy and then manufacturing problems resulting from the earthquake caused a continuing decline, which bottomed out in calendar 2011 at 1.64m vehicles, before rebounding over the next few years.

For calendar 2017, Toyota was the local #2 brand behind Ford with just under 2.13m passenger cars and light trucks. Lexus added a further 305k units, making Toyota the #3 manufacturer behind GM and Ford. The Camry, traditionally the company's top-selling model in the US, was overtaken for the first time by the RAV4 compact SUV, sales of which jumped by 16% to almost 408k units. It was the #4 overall vehicle in the US behind pick-ups from Ford, Chevrolet and Ram. The Camry (387k) and Corolla (329k) were also both in the Top Ten; while the Highlander was among the Top 20 at 216k, and Tacoma the Top 30 at 198k. The 4Runner fullsize SUV, Sienna wagon and Tundra pickup all sold more than 100k units.

The Prius was the world's first mass-produced hybrid gas/electric car when it first launched in Japan in 1997. It was introduced to North America and Europe in 2000, and sales took off from 2002 with the launch of the improved second-generation Prius. The group steadily introduced its hybrid technology into other models over the following years, including the Camry and several Lexus models. By March 2012, the group had sold a combined total of over 3.85m hybrid vehicles worldwide, including 2.6m Prius, and plans to convert all its vehicles to hybrids by 2020.

Sister brand Lexus was the leading luxury marque in the US for more than a decade from 2000 before being overtaken by German rivals in 2011. To boost sales to a younger market, the group launched a second standalone brand, Scion, through selected US Toyota dealerships in 2003. The Scion banner was shuttered in 2016, with its two models transferred to the main Toyota marque.

For calendar 2017, Toyota's home market of Japan accounted for combined group sales of 2.36m vehicles, up 4% on the previous year, and equivalent to just under 45% market share. Domestic unit sales have yet to top their 1990 peak, when the company sold more than 2.5m vehicles in Japan. Even so, Toyota remains the country's dominant car-maker by far. Toyota was the top-selling brand in Japan with sales of 1.59m vehicles (more than twice second-placed Honda), while Daihatsu was #4 with 657k (Focus2move figures). Lexus, a reasonably recent introduction to Japan, added 46k units.

In its home market, the Corolla was the best-selling passenger car for more than 30 years, but has been superceded by Toyota's hybrid models. The regular Prius was the overall #3 at 161k units, while the Aqua (marketed as the Prius C outside Japan), was #7 with 132k. The single top-selling vehicle in Japan was Daihatsu's Move mini-vehicle, with sales of 270k units. The group operates four separate sales channels in Japan, targeting different consumer types. The main Toyota network serves the luxury market, while Toyopet specialises in the mid-market, and Corolla concentrates on volumes sales, primarily of the car model of the same name. A new channel, Netz, was established in the early 2000s to reach a younger audience. The company is also the local dealer in Japan for Volkswagen through the Duo joint venture.

Despite the steady fall in Japanese sales, Toyota's volumes had just as steadily increased in virtually every other global territory until the 2008 crash. Toyota's biggest markets in the region are the UK (102k units), France (89k), Italy (85k) and Germany (81k), and it is the best-selling car brand in several smaller countries including Finland and Greece. Best-selling model in the region was the Yaris, which accounted for over a quarter of all sales. (The same model is marketed in Japan as the Vitz and in North America and Asia as the Echo). The group has a joint venture with PSA Peugeot Citroen in the region which launched three new small car models in 2005, the Toyota Aygo, as well as the Peugeot 107 and Citroen C1.

The group is even stronger in Asia, the best-selling car brand in several markets. In Indonesia, for example, Toyota is even more dominant than it is in Japan. Toyota and Daihatsu are the local #1 and #2 brands with a combined 55% market share, and sales of 393k and 203k units respectively. Toyota is also the local leader in Thailand (with 239k units). In Australia, Toyota overtook Holden as the best-selling manufacturer in 2003, and has continued to increase its lead ever since. Sales for 2017 were almost 217k units, equivalent to 19% share, and more than double second-placed Mazda. It has been the market leader in New Zealand since 1987. It is also now a major force in the Middle East.

However, the group's focus on developed markets has left it, to some extent, playing catch-up in the emerging BRIC markets of Brazil, Russia, India and China, where it lags behind rivals. In 2010, the company launched the Etios, a new low-cost model specifically designed for the Indian market and imported into Brazil from 2011. Toyota has a limited presence in South America, but is aiming to repair this by boosting production and marketing in Brazil and Argentina. Though still small by comparison with other countries, sales volumes in the biggest regional market of Brazil have almost tripled since 2001 to 61,000 vehicles. Sales are significant - 1.2m units in China, 190k in Brazil, 140k in India, 94k in Russia - but in all four markets Toyota ranks only #6 behind rival manufacturers.

China proved an especially difficult market to crack. Toyota was among the first foreign manufacturers invited to enter China in the 1970s, but the company was too preoccupied with expansion in the US to take up the offer. As a result, the Chinese government returned the snub in the 1990s, and it took Toyota until 2002 to secure a suitable partnership with what was then one of the country's smaller car factories, First Automobile Works (FAW). More recently it has been able to form a second alliance with Guangzou Automobile, already established as Honda's partner in China, to build the Camry model. However, sales of all Japanese manufacturers in China were severely impacted in 2012 by a nationalist dispute between the two countries. This prompted a boycott by Chinese consumers of Japanese goods. Although those feelings began to recede in 2013, Toyota has remained outside the leaders.

Quality Issues

Yet despite - or more accurately because of - Toyota's dramatic growth, the company has repeatedly struggled to maintain quality control. Its record for reliability - arguably the brand's single most important selling-point - was first dented in 2005 by a series of recalls, totalling almost 2.3m cars in the US and 1.9m vehicles in Japan. That led to the creation of a dedicated quality control unit led by group CEO Katsuaki Watanabe. Yet the recalls continued, and in fact grew dramatically in scale. In 2006, the company called in 2.1m vehicles in its two main markets, leading to an order from the Japanese government to act on the situation. In 2007, a further 1.2m cars had been recalled by October, prompting US magazine Consumer Reports to stop automatically recommending Toyota's vehicles.

In 2009, Toyota issued its biggest ever recall in North America, to replace accelerator pedals on 4.3m Toyota and Lexus vehicles after a fatal high-speed crash caused by a pedal becoming trapped under a floormat. Yet only a few months later it was forced to issue a new recall affecting 3.4m vehicles, half of them already recalled and adjusted, after evidence that some of the reported acceleration problems had been caused not by the floormat but by a faulty accelerator mechanism. At the same time, the original floormat recall was widened to cover another 1.1m vehicles. As it rushed to deal with these problems, the company took the unprecedented step of taking eight models, including versions of the popular Camry and Corolla, off-sale. The recalls soon spread to other markets in early 2010, so that by mid February a massive 8.6m vehicles were being called in for floor mat and accelerator adjustment. affected. At the same time another set of problems emerged with the brakes on the brand's flagship Prius model, leading to a new recall for up to 500,000 of those vehicles as well. The group was subsequently cleared of any electronic defects in connection with its "sticky pedals", but the repercussions from the original problem continued. A further recall of almost 2.2m more vehicles in February 2011 brought the total number of vehicles affected since 2009 to more than 14m. At the end of 2012, Toyota agreed to pay a total of $1.1bn to US car owners to cover a range of complaints including the cost of additional safety features to declines in resale value. In early 2014 it agreed to pay a record fine of $1.2bn to US regulators as a penalty for obscuring and obstructing a speedy fix of the problem.

Other Interests

In addition to its main car businesses, Toyota controls a large collection of satellite companies making automotive parts and components. One of the most significant of these is Toyota Boshoku which makes auto interior parts and and air conditioning systems. The group also has a substantial portfolio of other interests beyond auto manufacturing These are grouped into four sectors. The group's Toyota Financial Services Corporation subsidiary has a large business portfolio including sales finance, vehicle insurance, and credit cards. The group has a 35% controlling stake in Aioi Insurance, Japan's fourth-largest non-life insurer and a leader in motor cover. It was formed from the merger in 2001 of Toyota's Chiyoda Fire & Marine insurance with rival Dai-Tokyo Fire & Marine. Toyota Financial Services Securities Corporation was formed in 2000 to market investment and unit trust products to group and other customers. It introduced TS Cubic and other credit cards in 2001, and also operates e-commerce portal gazoo.com. Separately, Delphys is a marketing services agency wholly owned by Toyota which handles selected assignments in Japan and through a small global network for Toyota and other affiliated companies.

Toyoda Automatic Loom Works is the group's industrial equipment arm, manufacturing a variety of automatic-guided vehicles, automatic rack systems, power shovels, towing tractors, and aerial work platforms, as well as forklift trucks. Swedish subsidiary BT Industries engineers warehouse systems. The group has a variety of telecommunications businesses alongside its 11% stake in KDDI. Mobile Broadcasting Corporation is a joint venture with Toshiba, Fujitsu and other companies to broadcast multimedia content to automobiles through a satellite. The group has two joint venture with Sony to supply internet services, All Planning Inc and Crosswave Communications. Toyota also manufactures prefabricated housing, and makes leisure boats and cabin cruisers in North America and Japan. AirFlite is a US-based aviation services business for corporate travellers providing jet storage, aircraft service, flight planning and more.

The group was involved for several years from 2002 in Formula 1 and NASCAR racing, with its own sponsored team, and as a supplier of engines to the AT&T Williams Team. However in November 2009, it announced plans to quit the sport altogether. The high costs of participation were the main cause for the withdrawal, but the lack of wins by the Toyota team as well as the sport's poor environmental reputation were also important factors. In 2015, the group became the first automobile manufacturer to become a top-tier sponsor of the Olympics, with a eight-year deal running from 2017 to 2024. The deal was valued at around $1bn. That includes the Winter Olympics 2018 in South Korea and 2020 Summer Games in Tokyo.

Until recently, Toyota had proved to be one of the most consistent performers among Japan's major corporations in recent years, guided by a business philosophy centred around the Japanese concept of kaizen, or continuous improvement. This ensures that corporate goals are changed every time the company comes close to hitting them, and also calls for repeated shake-ups of the group's structure and management team to avert stagnation.


The dramatic fall in global automobile sales during 2008 was exacerbated for all Japanese manufacturers by the strength of the yen against other currencies. After a record profit of Y1,718bn in the year ending 2008, the group plunged to a net loss of Y437bn ($4.3bn) for the year ending March 2009, mainly the result of a Y766bn deficit in the final quarter of the year, one of the biggest quarterly losses ever recorded by a Japanese company. Despite an initial forecast of a further 20% fall in revenues for the year to 2010, as well as an even deeper loss of Y800bn, there was actually a sharp improvement in performance, despite the massive costs of the global sticky pedal recall. Final revenues for the year to 2010 came in at Y18,950bn, down 8% and the lowest level since 2005, but the group returned to profit, with net income of Y209.5bn. For the year ending March 2011, Toyota's revenues were Y18,993bn ($221.6bn), up fractionally on the year before. However net income almost doubled to Y408bn ($4.8bn).

The knock-on effects of the 2011 earthquake disaster were felt more keenly the following year, along with the after-effects of severe flooding in Thailand and the soaring value of the yen. Revenues for the year to 2012 slipped back again, in Japanese yen at least, to Y18,584bn (although the dollar equivalent rose to $234.9bn). Net income plunged 30% to Y284bn ($3.59bn). Without problems from disasters and bolstered by better exchange rates, revenues for the year ending March 2013 jumped by almost 19% to Y22,064bn ($266bn), their highest level since ye 2008, while net income soared by almost 240% to Y962bn ($11.6bn). The biggest contributor to profit was the swing from loss to a large profit in Toyota's domestic market.

For the year to March 2014, positive exchange rate fluctuation helped to boost revenues by 16% to Y25,692bn ($256.4bn), while net income made another leap of almost 90% to Y1,823bn ($18.2bn). There was another increase of 6% in year ending 2015 to Y27,235bn ($248bn), while net income jumped a further 19% to Y2,173bn ($19.8bn).

There was continuing steady growth in the year to March 2016. Helped by beneficial exchange rates, revenues rose 4% in Japanese Yen to a record Y28,403bn, though the US$ equivalent fell to around $237bn. Net income was up 4% to Y2,313bn ($19.3bn).

Revenues to 2017 slipped back by almost 3% to Y27,597bn, once again mainly as a result of currencies. The US$ equivalent rose sharply to $254.8bn. However, net income tumbled by almost 21% to Y1,831bn ($16.9bn). Automotive operations contributed almost 91% of revenues, or Y25,081bn. Sales to Japanese customers accounted for almost 32% of total revenues, less than North America (at 36%). However Japan accounted for more than 60% of operating profit. The rest of Asia contributed 16% of revenues and Europe just 9%.


The world's #1 car. Not bad for what is still in some ways a family firm. Founded by patriarch Sakichi Toyoda in 1918, it is still led by a family member (although non-family executives held the CEO role from 1995 to 2009). The original Toyota business was very different from the motor manufacturing powerhouse of today. Sakichi Toyoda's company was the Toyoda Spinning & Weaving Company. But the development of automatic looms in the 1930s, and the engines to run them, suggested to Sakichi's son Kiichiro that he might be better off moving into a more productive industry. He renamed the company Toyota - easier to write in Japanese characters than Toyoda - and steered it in a new direction making automotives. The company turned out its first prototype vehicle, the Model AA, in 1936, and Toyota Motor Company was set up the following year. Nevertheless, looms remained a key part of the business for the next 15 years. It was only post-war turmoil that shifted the company's focus more firmly towards the motor industry.

Development in the 1950s was rapid. The company established overseas offices in Taiwan and Saudi Arabia early in the decade, and moved into industrial vehicles with the launch of a forklift truck in 1956. But the real step forward came in 1957 with the development of the Toyopet Crown automobile, the first model designed for export to the world's largest car market, America. Toyota Motor Sales USA was formed in 1958, and operations were quickly established in Brazil, Australia and South Africa in the years that followed. A UK office was founded in 1965. In fact the Crown was a failure in the US, designed for the compact Japanese environment rather than the wide-open spaces of the US. But Toyota refused to give up, and the Corolla, launched in 1968, was an enormous success, allowing Toyota to displace VW as America's #1 auto importer by 1975. From 1967 to 1982 the company was led by Eiji Toyoda, nephew of founder Sakichi Toyoda, and it was he who spearheaded its expansion into international markets.

Toyota spread around the world over the following years. In 1984, a joint venture was formed with General Motors, New United Motor Manufacturing, to build Toyotas in the US. A similar, but short-lived, operation was formed in Australia four years later. To broaden their range, the company launched its Lexus line of luxury cars in 1987 and in 1992 Toyota established the Duo sales operation to market Volkswagen and Audi cars in Japan. Toyota established another joint venture with General Motors in 1999 to develop environmentally friendly fuel cells to replace petrol, and launched Toyota Mapmaster to develop computerised car navigation systems.

The group pushed into electric cars with the full launch of the Prius, a hybrid "gas-electric" car competitive with conventional automobiles but twice as fuel efficient. Launched in Japan in 1997, it was rolled out globally from 2000. The Vitz, which launched in Europe in 1999 as the Yaris, was the company's bid in the ultra-compact car market. Also in 1999, the group launched an ambitious consumer project in Japan, forming an alliance with other manufacturers including Panasonic to launch separate products under a shared brand, WiLL. Toyota was the driving force behind the project launching the stylish WiLL Vi sub-compact car in 2000. Two further models followed, the five-door, five-seat WiLL VS in 2001, followed by the WiLL Cypha in 2002, a car with email and internet access facilities built-in. The project was eventually discontinued in 2004.

Meanwhile the company also began aggressively diversifying its business in Japan. In 2000, Toyota acquired a 5% stake in Yamaha Motor, a subsidiary of piano manufacturer Yamaha Corporation, for Y10.5bn ($96m); and increased its stake in ailing Hino to almost 34%. Japanese truck sales plummeted 28% in 1998, and Hino notched up losses of Y35bn ($326m). In April that year Toyota agreed to invest Y120bn ($1.13bn) in KDDI, a new Japanese telecoms group created by the merger of its IDO subsidiary with DDI and KDD. At the same time Toyota announced it would join with railway and cable TV operator Tokyu Corp and Sony to provide an internet service for broadband networks.

Meanwhile Hino continued to struggle. Toyota boosted its shareholding to over 50% in 2001 and installed one of its own executives as the company's President. Meanwhile the group formed a joint venture with PSA Peugeot Citroen, based in the Czech Republic, to manufacture small cars for launch in 2005. In 2002 the group agreed a joint venture with China's leading motor manufacturer First Automobile Works (FAW) to produce up to 400,000 cars annually by 2010.

Toyota announced an overhaul of its senior management team in early 2005. Fujio Cho, regarded as the architect of the group's aggressive expansion since 2000, announced his retirement from day-to-day management mid-2005. In a highly uncharacteristic situation for Toyota, the company was accused in 2006 of covering up vehicle defects and was ordered by Japan's Transport Ministry to improve recall procedures. The company had already recalled more than 1m vehicles in Japan, and also issued a recall of 400,000 SUVs in the US.

Last full revision 6th April 2018

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