Company Overview
Toyota Motor corporation is one of the leading auto manufacturers. It makes over 9 million automobiles annually. The company produces, markets, and sells vehicles in over 170 countries (Toyota, 2021). Toyota Motor Corporation was incorporated in 1937 and is headquartered in Toyota City, Aichi, Japan. It has over 1,000 affiliate and subsidiary companies that produce the company’s vehicles and parts. In 2008, Toyota Motor Corporation surpassed General Motors to become the world’s largest vehicle manufacturer. It employs over 265,000 workers worldwide. Among Toyota’s products and services include different vehicle models ranging from mini-vehicles to large trucks.
The company is known for the fuel-efficient hybrid electric vehicles. It manufactures vehicles under different brands, for example, Toyota, Lexus, Hino, Daihatsu, and Ranz (Toyota, 2021). It controls a substantial stake in other automakers, such as Yamaha, Isuzu, Mazda, Suzuki, and Subaru. Toyota’s subsidiaries make automatic looms, cork and rubber materials, synthetic resins, woolen and cotton goods, and steel. The corporation’s services include financing, banking, and leasing. The automaker has diversified into telecommunications and prefabricated housing. However, 90% of Toyota’s total sales come from its automotive business, including sales finance.
Company’s Customer Base
Toyota’s customer base involves persons aged between 30 and 50 years who have a middle-range income. The company targets the customers who are looking for quality and good value for their money. Further, the customer base includes individuals and businesses looking for innovative, reliable, safe, sustainable, and durable automotive vehicles (Toyota, 2021). Toyota manufactures and sells engines to other companies, such as Lotus, Pontiac, and Spyker Cars. For the environment-conscious customer, Toyota has a solution in its hybrid electric vehicles, for example, the Toyota Prius. The customer base spans the whole globe where they are served by a network of Toyota companies in different regions, for instance, Africa, Asia, Central and South America, the Middle East, and Oceania.
Obstacle Toyota Currently Faces
One of the obstacles Toyota Motor Corporation faces involves product safety recalls. The company has recently recalled more vehicles than its competitors, a problem attributable to incompetency in management (Liu, & Varki, 2021). It is apparent that Toyota Motor Corporation cannot assure the quality of its vehicles to its customers. In 2020, the company recalled some Toyota and Lexus vehicles manufactured between July 2017 and December 2019 over a fuel pump that would stop operating, occasioning a display of the warning lights and messages on the instrument panel and the engine running rough (Toyota, 2020). The brands with the problem included Toyota Sienna and Lexus RX 350, Toyota Avalon, Camry, Corolla, and Toyota RAV4. The result was the vehicles stalling and, in some instances, failing to restart. If a motor vehicle stalls while moving at high speeds, then they have a higher chance of crashing.
Impact of the Obstacle to Revenue/Market Share
The recall can potentially impact Toyota’s market share globally as was the case during 2010 recall crisis due to sticky accelerator pedals. The fall in market share would be aggravated by diminished customer trust in its products, injured brand image, and possibilities of congressional scrutiny, class action lawsuits, and criminal investigations (Toyota, 2020). Investors would not want to be associated with a company that risks the lives of its customers, hence would withdraw their shareholding, making the share to plummet. During the 2010 sticky accelerator pedals crisis, Toyota’s maker share fell by 4% as the company halted the sale of the recalled brands (Toyota, 2020). Prolonged criminal and regulatory investigations would lead to further drop in the company’s market share.
References
Liu, D., & Varki, S. (2021). The spillover effect of product recalls on competitors’ market value: The role of corporate product reliability. Journal of Business Research, 137, 452-463.
Toyota (2020, October 28). Toyota is conducting a safety recall involving certain Toyota and Lexus vehicles. https://pressroom.toyota.com/toyota-is-conducting-a-safety-recall-involving-certain-toyota-and-lexus-vehicles-6/
Toyota (2021) Profile: Company information, company profile. https://global.toyota/en/company/profile/?padid=ag478_from_header_menu
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