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Transcript of Toyota
Japan Trip Presentation:TOYOTA
Jose F. Rodrigues Neto
Paolo Gencarelli
Greg McKelvey
Giulio Pappalardo
Kazutoshi Tominaga
• Company Background
• Car Industry Trends
• Toyota Challenges & Strategies
• Our Questions for Toyota
AgendaAgenda
Company BackgroundCompany Background
• Annual sales: $114 Billion
• Production: ~5.8 million Units/Yr.
• Employees: ~210,000 people
• 56 manufacturing plants in 6 continents
• 3rd largest automotive manufacturer in the global market
Headline Facts: ToyotaHeadline Facts: Toyota
• Established in 1937 out of Sakichi Toyoda’s weaving machine company
• Launched first car (SA Model) in 1947 • “Toyota Production System” formed in 1950
based on Just-In-Time principle• Overseas production starts in 1959 (Brazil)• In 1972, cumulative production >10M units• In 2002, entry in the Formula 1 circuit
Company HistoryCompany History
• Automotive [90.0% Sales]
– Design, manufacture and sales of passenger cars, recreational vehicles, SUVs and related parts
• Financial Services [4.5% Sales]
– Provisions of loans to car buyers and car dealers
• Others [5.5% Sales]
– Industrial vehicles (forklifts, etc.)
– Pre-fabricated housing
Business Segments - Business Segments - Low DiversificationLow Diversification
Japan Market (2000)
Strong International Presence and Dominant Strong International Presence and Dominant Position in the Domestic MarketPosition in the Domestic Market
GM
Ford
TOYOTA
VWDaimlerChrysler
Fiat NissanPSA
HondaRenault
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
Int’l Market (2000)
In 1,000 Units
8
Other 0,1
Asia 0,3Europe 0,2
North America 1,1
Japan 3,5
Other 0,6
Asia 0,3
Europe 0,7
North America 1,8
Japan 1,8
Production Sales
Toyota Production and Sales (MM Units)
21%
67%
12%
35%
35%
30%
Balanced Global SalesBalanced Global Salesvs. Predominantly Export Based Productionvs. Predominantly Export Based Production
3-year stock price comparison
Strongest Stock Market Performance Strongest Stock Market Performance Relative to the IndustryRelative to the Industry
• Market Cap
• 5-Yr CAGR Revenues
• 5-Yr Pre tax Profit Margin
• 5-Yr CAGR Earnings
• ROE
• $ 102 Bn
• 3.0%
• 7.3%
• 17.3%
• 9.5%
• $ 43 Bn (DaimC)
• 3.8%
• 4.5%
• –12.63%
• 11.8%
INDUSTRY
Strong Financial PerformanceStrong Financial Performance
• Revolutionized manufacturing industry
• At its core is “lean” principle– Relentless drive to improve efficiency and
eliminate waste
• Beginnings of TPS were born out of necessity due to lack of resources in post-war Japan
Revolutionary Production SystemRevolutionary Production System
Toyota Production System:Toyota Production System:Key Main ConceptsKey Main Concepts
• Just In Time manufacturing• Small batches which reduced inventory costs,
tightened relationship with suppliers and improved quality control
• Just In Time manufacturing• Small batches which reduced inventory costs,
tightened relationship with suppliers and improved quality control
• Low cost supplier
• Low cost supplier
• Asking “Why?” 5 times to locate source of problems• Stopping the production line whenever there are quality
problems to ensure they are not repeated
• Asking “Why?” 5 times to locate source of problems• Stopping the production line whenever there are quality
problems to ensure they are not repeated
• JIT • JIT
• “5 Whys” Quality
• “5 Whys” Quality
• Long term supplier relationships• Long term supplier relationships
Car Industry TrendsCar Industry Trends
• Consolidation
• Push to Emerging Markets for Growth
• Global Emphasis on Small-Size Vehicles
• Environmentally Friendly Products
• Internet as a Key Enabler of Change of
Automotive Retailing
Car Industry TrendsCar Industry Trends
Drivers of ConsolidationDrivers of Consolidation
Platform Sharing
Purchasing Rationalization
Capacity Rationalization
Supply Base Rationalization
Forge Strong VBO Relationships
Integration of Production & Capability Sets
Create & Manage Global Supply Network
Veh
icle
Bra
nd
Ow
ner
Su
pp
lier
Mar
ket
Driv
ers
Pro
duct
D
river
sN
ew C
apab
ilitie
s D
river
s
New Scale Economies in Production, Purchasing and Product Platforms
Enhanced Market Penetration
Progress Toward Integration Status
New Scale Economies
“Of the 20 auto makers in 1965, 14 have since merged or been taken over. By 2006, the top 14 VMs will account for 90% of light vehicle output.”
Type Rationale Tactics
Growth by Region 1998-2006
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Asia-Pacific
EastEurope
NorthAmerica
WestEurope
SouthAmerica
Africa /MiddleEast
% o
f G
row
thEmerging Markets to Provide Long-Term Emerging Markets to Provide Long-Term
Growth in Light Vehicle ProductionGrowth in Light Vehicle Production
Light Vehicle Segment% Growth
0.0% 5.0% 10.0% 15.0% 20.0% 25.0%
A
B
C
C/D
D
Small-size Utility
Small-size Van
Mid-Size Utility
Mid-Size Van
Full-Size Pick-up
Global Emphasis on Small-Size VehicleGlobal Emphasis on Small-Size Vehicle
Reduction in Polution Standards (Grams of NOx per mile)
0
0.5
1
1.5
2
2.5
3
3.5
1975 1977 1981 1994 1999 2004 -2009
Cars
Smaller SUVs, Minivans, and Light Trucks(Less that 6000 lbs)
Reduction in Emission StandardsReduction in Emission Standards
Toyota ChallengesToyota Challenges
• Industry overcapacity
• Economic downturn
• Globalization
• Environmental concerns
• The IT revolution
• Diverse and shifting consumer demand
Toyota Challenges - SummaryToyota Challenges - Summary
Toyota’s StrategyToyota’s Strategy
• Increase competitive strength through advanced technology
• Promoting a global perspective• Value-driven cost reduction
(CCC21 program)• Expanding the value chain—becoming
the Total Mobility Services Provider• Expansion of model offerings—Quality,
value, and style?
Our Questions to ToyotaOur Questions to Toyota
Toyota QuestionsToyota Questions• What do you see as the key elements to succeeding in the European
market?• After Japan, U.S., and Europe, where do you see as the next critical
market to Toyota’s globalization effort?– Emerging markets
• What have been the most difficult challenges in the global implementation of “The Toyota Way?”
• While sales continue to globalize, non-Japan production footprint appears to be leveling at 35%. What is Toyota’s strategic direction on “make where sell”? Challenges?
• Does Toyota foresee Internet as viable infrastructure in purchasing, supplier relationships? How will Toyota integrate into TPS?
• When do you think hybrid vehicles will reach critical mass?• What is Toyota’s view on industry consolidation and potential benefits of
acquisitions / mergers?• How does Toyota’s recent initiatives reflect future strategic focus (e.g.
new channel brand in U.S., participation in Formula-1)
Reduction in Emission StandardsReduction in Emission Standards