Case Study

Toyota Motor Company (Toyota)

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CASE STUDY
Candidate

brief

Scenario

You are a self-employed Marketing Consultant who has been hired by Toyota Motor
Company (Toyota).

You have been asked by Toyota to undertake a six-side strategic marketing

audit to analyse both internal and external factors, including strategic
uncertainty in the external market impacting the future of Toyota, so that the
organisation can understand its strategic options for growth and profitability.
Consideration should be given to Toyota’s strengths and weaknesses, core
competences, value proposition, competitive advantage, value creation, and its
readiness to compete in global markets.

You should also consider Toyota’s current strategic intent and direction, while
taking into account its organisational culture, vision and mission, stakeholder
expectations, and current brand strategy, including its contribution towards
enhancing organisation value. In addition, you should consider the challenges
and opportunities arising from emerging market trends, changes in technology
and customer behaviour preferences.

As part of your six-side audit, you should also review the organisation’s
financial position, including sustainable funding sources to implement
strategic options, its strategic risks, organisational constraints, and mitigating
strategies to overcome these risks.

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Toyota

Introductio

Founded in 1937, Toyota Motor Corporation (Toyota) is one of the top 10

leading auto manufacturers in the world. It manufactures and sells motor
vehicles. The company has its headquarters in Toyota City, Aichi, Japan. Toyota
has operations in Japan, Europe, North America and Asia. In 2019 Toyota had
more than 370,000 employees.1

Toyota has a full range of automotive products, including compact, midsize,

luxury, sports and speciality cars, sport utility vehicles (SUVs), pickup trucks,
minivans, trucks and buses. Toyota Motor Corporation has other vehicle
manufacturing subsidiaries, which include Daihatsu Motor Co. Ltd. and Hino
Motors.

Toyota offers financial services including leasing, wholesale financing, credit

cards and insurance services. Toyota also operates in more diverse areas
including intelligent transport systems, information
technology/telecommunications and housing. 2

Toyota reported revenues of 3$281.2 billion for the fiscal year ended March 2019.
The
company’s operating margin was 7% and it recorded a net margin of 6.2%.

Toyota and its affiliate organisations produce motor vehicles and related parts
through over 50 overseas manufacturing companies in 26 countries. The
company sells its vehicles through approximately 170 distributors in more than
190 countries and regions. Toyota’s automotive sales network consists of 280
dealers and 4,700 sales/service outlets.

Toyota operates through three divisions:

 Automotive
 Financial Services
 All Others

Toyota's automotive operations include the manufacture, design, assembly and

sale of passenger cars, minivans, and commercial vehicles such as trucks, and
related parts and accessories. The company's subsidiary Daihatsu produces and
sells mini-vehicles and compact cars. Another subsidiary, Hino Motors, produces
and sells commercial vehicles such as trucks and buses. Toyota also
manufactures automotive parts, components and accessories for its own use
and for sale to others.

The vehicles manufactured by Toyota, Daihatsu and Hino can be classified into
three categories: hybrid vehicles, conventional engine vehicles, and fuel cell 4
vehicles. Toyota's financial services operations are handled by Toyota Financial
Services (TFSC), a wholly- owned subsidiary of the company. Toyota has
financial services companies in 35 countries and regions, which support its
motor operations globally. This division primarily provides financing to dealers
and their customers for the purchase or lease of Toyota vehicles. TFSC also
provides retail leasing through the purchase of lease contracts originated by
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Toyota

1
[Link]
2
Toyota Motor Corporation. Company Profile, MarketLine, October 2019
3
All $ symbols refer to the US dollar
4
A fuel cell is a device that produces electricity by the chemical reaction between a
source fuel and an oxidant; which can be used to power cars.

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dealers. The division also provides retail financing, retail leasing, wholesale
financing and insurance.

Toyota’s All Other division includes:

 information technology
 an e-commerce marketplace called [Link]
 design and manufacture of prefabricated housing.

Toyota aims to develop leading-edge technology and product development in

areas such as information technology, energy, telecommunications and
materials, Toyota wants its designs to reduce accidents and other impacts on the
environment. Toyota has research facilities across Japan, the USA, China, Asia-
Pacific and Europe regions. The company focuses on improvements to mobility in
electric and hybrid technologies. It also focuses on the internal combustion
engine in terms of fuel economy technology, as well as technological
advancements that help the environment with increasingly stringent emission
standards.
Toyota is very much aware of societal and environmental issues and aims to
respond to these by embracing emerging safety technology such as automated
driving technology and connected car technologies.

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Vision, mission, organisational culture and strategic direction

Toyota states that within its global mission, there is a commitment to being a
company that customers will choose and that they will feel good about being
associated with the brand.
Toyota emphasise this commitment with the slogan: ‘Rewarded with a smile
by exceeding your expectations’.

Its global vision contains Toyota’s intentions and resolve for the future. It states
its vision as follows:
‘Toyota will lead the way to the future of mobility, enriching lives around
the world with the safest and most responsible ways of moving people.
Through our commitment to quality, constant innovation and respect for
the planet, we aim to exceed expectations and be rewarded with a
smile. We will meet our challenging goals by engaging the talent and
passion of people, who believe there is always a better way.’ 5
Toyota’s mission statement focuses on products and the consumer. The
company emphasises quality of products, safety and customer satisfaction.
It also has employee education at the centre of its vision. In addition,
Toyota maintains a commitment to technological innovation and corporate
social responsibility.

Toyota states that it has continuously strived to contribute to the sustainable

development of society since its inception. In 2005, it announced the
'Contribution Towards Sustainable Development' with its stakeholders. This was
revised in 2008 to become Toyota’s Corporate Social Responsibility (CSR) policy
to take into account environmental changes and heightened global societal
interest in CSR. It suggests that it achieves this ‘through the manufacturing and
provision of innovative and quality products and services that lead the times’.
The company has formulated a set of Guiding Principles at Toyota, which
explain its vision of ‘Seeking Harmony between People, Society and the Global
Environment, and Sustainable Development of Society through Manufacturing.’

‘The Toyota Way’ and ‘Toyota Code of Conduct’ were launched in 2001 and
contained the values and methods that employees should work towards in
putting the Guiding Principles at Toyota into practice. In 2007, Toyota adopted
the Global Vision 2020, which was based on the Guiding Principles, and a
medium to long-term management plan was drafted in order to achieve its goals.

The Toyota Way’ has two main pillars: 'Continuous Improvement' and 'Respect
for People'. Under ‘Continuous Improvement’ are the values of ‘Challenge’,
‘Kaizen’ (improvement of all business functions involving all employees) and
‘Genchi Genbutsu’ (go and see for yourself by directly observing locations and
conditions)6. ‘Respect for People’ includes the values ‘Respect’ and ‘Teamwork’.
Toyota commented, that it is never satisfied with where it is, and always works
to improve its business by putting forward new ideas and working to the best

5
[Link]
[Link]/company/history_of_toyota/75years/data/conditions/philosophy/
[Link]
6
Genchi Genbutsu is the Japanese principle of going to and directly observing a
location and its conditions in order to understand and solve any problems faster and
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more effectively. The phrase literally translated means ‘go and see for yourself’ and
is a part of the Toyota Way philosophy.

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of its abilities. It respects all Toyota stakeholders, and believes the success of its
business is created by individual effort and good teamwork. 7

This comprehensive approach focuses on innovation and customers’ needs.

Toyota has various mission statements for its businesses in different markets.
The company’s global mission is to ‘Create vehicles that are popular with
consumers’. Toyota’s mission statement includes the following strategic
actions:

 Provide world-class safety to protect the lives of customers.

 Provide optimization of energy/infrastructure to local communities.
 Put high priority on safety and promote product development with the
ultimate goal
of “completely eliminating traffic casualties”.
 Deliver cars that stimulate and even inspire, and earn smiles from our
customers.
 Address employees’ education under “Genchi-genbutsu” philosophy,
which is to go to the source to find the facts to make correct decisions,
build consensus and achieve goals at our best speed.
 Through true mutual trust with partners, contribute to the
development of new technology and improved expertise.
 Contribute to economic development of local communities with R&D
operations functioning effectively in each region.’8
The origins of Toyota’s ‘Customer First’ and ‘Quality First’ principles are
epitomised by Five Main Principles of Toyoda, which mirror the five values
discussed above. These embody the thinking of Sakichi Toyoda (who was the
father of Kiichiro Toyoda – who established Toyota in 1937), and the spirit of
audit and improvement. Since its creation, Toyota has built a corporate culture
that focuses attention on customer satisfaction, quality and continuous Kaizen
(improvement), achieved through Genchi Genbutsu (onsite, hands-on
experience).
With these values epitomised in Toyota’s Global Vision, each employee is
expected to maintain and own this culture with a sound awareness of issues,
thereby striving to continuously implement Kaizen, and collaborating closely
with personnel in other fields to enhance customer safety, peace of mind, and
satisfaction.
Toyota believes that the quality of the work performed by each employee is the
basis of product quality, sales and service quality. It believes that its ‘products
and services can only gain the confidence of customers when all employees
across every process, from development, purchasing, production, and sales to
after-sales service, build in quality, coordinate with one another across
processes, and implement the quality assurance cycle.’ 9
Toyota says that quality starts with the ‘spirit of audit’ and ‘improvement’. It
strives for continuous improvement based on the continuous implementation
of the PDCA (plan, do,

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7
[Link]
[Link]/company/history_of_toyota/75years/data/conditions/philosophy/
[Link]
8
[Link]
9
Toyota Motor Company. Annual Report 2019

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check and act) cycle. Through this, Toyota chases ever-higher quality and it is at
the core of
Toyota’s manufacturing.
Another key principle is that of the ‘Customer First’, where Toyota provides
‘customers with products and services that bring smiles to their faces’. It aims to
provide cars that realise ‘superior environmental, safety, and quality
performance without sacrificing driving perfor- mance or other aspects of the
intrinsic appeal of cars, at an affordable price’. It does this by collecting
information from its dealers and customer satisfaction surveys at its customer
assistance centres.
It also has a number of after-sales service measures in place for car use needs,
e.g. regular servicing, inspections, and repairs following breakdowns or
accidents. Toyota’s after-sales service aims to provide safety, peace of mind,
and comfort to customers who buy Toyota and Lexus brands.
Toyota strives to provide ever-better services in accordance with the 3S Spirit
(Seikaku + Shinsetsu = Shinrai, meaning Accuracy + Caring = Trust), to
ensure that customers will be highly satisfied with their vehicles.

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Toyota’s business and marketing strategies – timeline
In order to fulfil its mission, Toyota has followed a number of key strategies,
including international expansion by setting up wholly-owned subsidiaries in
many different countries. It has dealerships all over the world. Toyota has also
acquired other automobile and automobile parts manufacturers. It has entered
into Formula 1 and motor racing with sponsorship packages. It has also created
joint ventures to enable access to the global hybrid and electric vehicle markets.
Toyota has also opened research and development centres in many countries
and has invested in artificial intelligence (AI) and robotics. It has also diversified
into many areas, including housing, the chemical industry and the technology
industry. Toyota’s key strategies are highlighted in the following timeline:
In 1937, the Toyota Motor Corporation was established as a spin-off from Toyoda
Automatic Loom Works, a manufacturer of weaving machinery.
In 1943, Toyota merged with Chuo Spinning.
In 1943, the company established Aisin Seiki, an automobile parts
manufacturer. In 1947, Toyota launched its first small car.
In 1957, the company established Toyota Motor
Sales USA. In 1962, Toyota established Toyota
Motor Thailand.
In 1966, the company took over Hino
Motors. In 1967, the company took over
Daihatsu.
In 1970, the company established the Toyota Production System,
known as TPS. In 1975, Toyota Motor entered the prefabricated
housing industry.
In 1977, the company established Toyota Technical Center (USA) and started
both the Kinnura and Tahara plants. The company established Toyota Financial
Services to oversee its finance companies worldwide. It also started Sichuan
Toyota Motor in China.
In 1984, the company formed a joint venture, New United Motor
Manufacturing, with General Motors.
In 1988, the company established Toyota Motor Manufacturing Kentucky
(TMMK) in the USA.
In 1989, Toyota diversified its business and entered into the chemicals
industry by setting up the Toyota/Shin-Etsu Chemical joint venture.
In 1990, the company expanded its operations in Eastern Europe by setting up
subsidiaries in countries including Poland, Hungary and Russia. It also set up
operations in other European countries and in South America. Daihatsu supplied
mini-vehicles to Toyota on an original-equipment-manufacturer's basis for sale in
Japan. Toyota expanded its operations in the Asian market. It launched the
world's first business to recycle nickel in used hybrid- vehicle nickel-metal-

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hydride batteries. The company established Toyota Home (housing retail
company), and Toyota Motor Manufacturing, Texas, and Toyota Motor
Manufacturing, Alabama, both in the USA.

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In 1997, Toyota developed the Prius, the first mass market hybrid passenger
vehicle.
In 1998, Toyota was listed on the New York and London Stock Exchanges. The
company established Toyota Motor Manufacturing Indiana, Toyota Motor
Manufacturing West Virginia (both in the USA), and Toyota Motor Engine.
In 2001, the company established Toyota Motor Manufacturing France.
In 2002, the company entered Formula 1 competition. It started
manufacturing in Poland and California. The company started a joint venture
with PSA Peugeot Citroën to form Toyota Peugeot Citroën Automobile in the
Czech Republic.
In 2003, the Toyota Avensis was launched in Europe and it manufactured its
first Lexus outside Japan in the company's factory in Ohio, USA.
In 2005, Toyota started its Australian R&D base. Toyota also launched the
Lexus brand in Japan and entered Russia. It acquired an 8.7% stake in Fuji
Heavy Industries.
In 2006, Toyota set up manufacturing in North America. The company
established Toyota Motor Asia-Pacific in Thailand, and also opened the
Technical Training Centre of Toyota in China. It established Guangzhou Toyota
Motor, a joint vehicle production and sales company, with Guangzhou
Automobile Group.
In 2007, Toyota started to manufacture in Mississippi (USA) and it set up an
R&D base in Asia.
In 2008, the company developed Toyota FCHV, a fuel cell hybrid vehicle that
operates in cold regions at temperatures as low as -30 degrees celsius. It
developed the 'Winglet', a compact and personal transport assistance robot.
It established the Toyota Research Institute of North America.
In 2009, Toyota withdrew from the FIA Formula 1 World Championship. It
started to sell its vehicles in South Korea. Toyota, Nissan, Honda and Mitsubishi
entered a joint agreement to promote the installation of chargers for electric-
powered vehicles in Japan.
In 2010, it launched Toyota Fleet Leasing, in the corporate sector in Japan.
Toyota and Mazda reached an agreement to supply hybrid technology used in
the Toyota Prius. Toyota launched an electric vehicle developed jointly with
Tesla Motors, and in the UK started the production of the Auris Hybrid, the first
hybrid vehicle mass produced in Europe. Toyota and Microsoft entered into a
strategic partnership for telematics services using the Windows Azure platform.
In 2011, Toyota unveiled 17 new vehicles, including three concept cars from
GAZOO Racing. It also launched a newly developed leisure boat in Japan and
opened a new plant in Bidadi, India.
In 2012, Toyota UK entered an agreement with British Gas in the UK, to install a
large-scale solar panel at its manufacturing plant. Toyota and BMW signed an
agreement on collaborative research into lithium-ion 10 battery cells. Daihatsu
and Toyota announced a new cooperative business in Indonesia, and Toyota
launched the Prius, a hybrid vehicle in Japan. Toyota began exports of USA made
Venza vehicles to South Korea and developed a human
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10
a type of re-chargeable battery

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support robot prototype to assist independent home living for people with
limited arm or leg mobility.
In 2013, Toyota developed a next-generation advanced driving support system
which supported safer highway driving. Toyota, Nissan, Honda and Mitsubishi
agreed on the details of specific financial assistance they would provide to
installers of charging stations for electric vehicles. It started to work with BMW
on collaborative research in the field of next- generation lithium-ion battery
technologies. It partnered with Yamaha Motors to collaborate in the development
of communications-linked next-generation vehicles.

In 2014, Toyota recalled 2.9 million vehicles worldwide 11 because of

potentially defective airbags. The company also recalled 1.67 million vehicles
globally to address a number of defects, primarily associated with the brakes.
In 2015, Toyota recalled over 110,000 vehicles due to possible safety issues.
Toyota and Mazda entered a partnership in environmentally friendly
technology. Toyota, Nissan, and Honda entered a new joint support project
for the development of hydrogen station infrastructure in Japan. It opened
centres with the USA’s Massachusetts Institute of Technology (MIT) and
Stanford universities to accelerate artificial intelligence research.
In 2016, The company entered into partnership with Uber Technologies (Uber),
where Toyota would supply vehicles. It partnered with the University of Michigan
(USA) to accelerate artificial intelligence, and partnered with Menicon Co., Ltd. to
develop a new liquid livestock manure composting product. Toyota announced a
car-sharing and mobility service and planned to introduce Daihatsu’s small cars
in India. It launched its plug-in hybrid cars in China in 2018. Toyota and Daihatsu
announced the renewal of the five-year-old partnership with Microsoft Corp for
connected vehicle services for owners and dealers.
In 2017, Toyota Motor Europe invested £240 million in Toyota Manufacturing UK
in Derbyshire. The company and Suzuki Motor Corporation entered a
partnership to cooperate in areas including environment and safety, IT and the
mutual supply of products and components. Toyota entered an agreement with
Li Fham Co., Ltd. and NabehachiNousan Co., Ltd. for the development of a
cutting-edge agricultural model. Toyota opened a new North American
headquarters in Texas, USA. It opened a manufacturing plant in Malaysia with
an investment of $488 million.
Toyota introduced T-HR3, the company’s third generation humanoid robot. This
robot is operated and controlled by a person wearing controls to map hand, arm
and foot movements. Toyota and Panasonic agreed to jointly develop batteries.
The company set up a subsidiary with Microsoft, Toyota Connected Inc, to
develop car-connected technologies. It signed an agreement with Mazda to set
up a $1.6 billion vehicle production facility in the USA.
Toyota also diversified when it entered into an agreement with Pizza Hut to
distribute fresh- cooked pies with a robot-operated mobile in a pizza factory. It
introduced a car-share service with Servco Pacific in Honolulu, Hawaii (USA) and
entered into an agreement with Uber Technologies to introduce self-driving
technology. Toyota formed an agreement with SoftBank to launch ride-sharing
and self-driving car services. Toyota and Mazda formed a new joint venture to
oversee the construction of a $1.6 billion auto manufacturing plant in

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11
[Link]

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Alabama, USA. It worked with Suzuki to supply hybrid and other vehicles for
the Indian market. The company and Park24 agreed to start a business
partnership for a trial car- sharing service in central Tokyo. Toyota set up a
high-tech showroom in Saudi Arabia. Toyota announced new Premium Class
car-rental services. The company and Avis Budget Group entered into a
partnership to enhance customer rental experience.
In 2019, Toyota and Suzuki signed an agreement for a long-term partnership.
Toyota announced its plans to launch the new 12th-generation Corolla (one of its
flagship cars) in Malaysia. Toyota announced a $391 million investment at its
San Antonio truck assembly plant. It entered into a joint partnership with Subaru
and announced plans to invest $2 billion to develop electric vehicles in
Indonesia. Toyota and the Japan Aerospace Exploration Agency entered into an
agreement to consider international space exploration. Toyota, DENSO and
SoftBank Vision Fund announced a plan to invest $1 billion in developing Uber's
Advanced Technologies Group. Toyota entered into mobility service initiatives
and set up a joint venture with Panasonic to create new value for towns as a
whole, and to improve people’s lives, while seeking growth and advances in the
town development business. The joint venture will have three businesses:
housing, construction, and town development, which will build smart houses and
cities, and manufacture prismatic electric vehicle batteries from 2020. The
company partnered with NRGene to develop varieties of strawberry in Japan.

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Market performance
Toyota is ranked number two in the world in terms of its overall vehicle sales (in
units) and in its brand valuation. 12 Toyota’s vehicle sales have steadily increased
from 7.24 million units sold in 2010 to 8.97 million in 2019 13.
Net revenues have also gone up year on year, from $180.2 billion in 2010 to
$281.2 billion in 2019.
The company’s cash dividend for its shares grew from $1.34 billion in 2010 to a
peak of
$6.13 billion in 2016. In 2019 its cash dividend was $5.95 billion. It is also
noteworthy that cash dividends per share have increased from $0.42 in 2010
to $2.09 in 2019.
Toyota’s total assets have grown from $288.8 billion in 2010 to $494.8 billion
in 2019. Of these, liquid assets have increased from $44.3 billion in 2010 to
$89.9 billion in 2019.
From 2010 ($6.9 billion), Toyota has steadily increased its investment in
research and development to $9.98 billion in 2019.
The company’s shareholder equity has increased from $98.67 billion in 2010
to $184.28 billion in 2019. Toyota’s return on equity was 2.1% in 2010,
reached a peak at 13.9% in 2015 and was 9.8% in 2019. Return on assets
was 0.7% in 2010, with a peak in 2018 at
5%, moving down to 3.7% in 2019.14

Toyota operates in the following key regions:

 Japan
 North America
 Europe
 Asia
 other
Sales in 2019 in its key regions were variable. In Japan, it sold 2.22 million units,
a decrease of 29,136 units from 2018. In North America, vehicle sales were 2.74
million units, a decrease of 61,420 units. In Europe, vehicle sales were 994,060
units, an increase of 25,983 units. In Asia, it sold 1.68 million units, an increase
of 141,688 units. In other regions (Central and South America, Oceania, Africa
and the Middle East), it sold 1.33 million units, a decrease of 64,714 units.15
In 2018, of Toyota’s revenue in its five regions, the Japan region accounted for
31.6% of its total revenue, with 35.2% from North America, 10% from Europe,
15.3% from Asia and 7.9% from the rest of the world. In 2019 Toyota had 24
plants and manufacturing companies in the Asia region, whilst in Japan they had
17 and in North America 10. In the Europe region Toyota had 29 distributors, in
Asia there was 20; whilst in the ‘other’ region

12
See appendix 2 - The world’s top 10 most valuable automobile brands
13
All references to 2019 in this section relate to Toyota’s performance for the fiscal
year ending March
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2019
14
Toyota annual report, March 2019.
15

[Link]

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(rest of the world) Toyota had 113 distributors. In terms of Research and
Development sites Toyota have 6 in Japan, 4 in Asia and 3 in both Europe and
North America.16
Toyota Financial Services (TFSC), is a wholly-owned subsidiary of the company.
Toyota currently operates financial services companies in 35 countries and
regions, which support its automotive operations globally. The segment provides
financing to dealers and their customers, and also provides retail leasing to more
than 27,000,000 customers across its network. In 2018, the financial services
business recorded net revenues of $18.6 billion, which accounted for 6.7% of the
company's revenue. In 2018, the company had 5,465 financing contracts in
North America, 1,112 in Europe, 1,672 in Asia, 2,103 in Japan and 846 contracts
in other countries.
Toyota’s All Other Business division includes the design and manufacture of
prefabricated housing, information technology, and an e-commerce
marketplace called [Link]. In 2018, this division reported revenues of
$10.23 billion, which was 3.7% of the company's revenue. 17

16
See Appendix 1 - Global Perspective/Data by Region
17
Toyota Motor Corporation. Company Profile, MarketLine, October 2019

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Corporate Brand Reputation and CSR
In 2005 (revised in 2008) Toyota set out its CSR policy, which was based on its
guiding principles as identified above. The policy suggests that the company
wants to contribute to the ‘sustainable development of society and the earth
through all business activities that we carry out in each country and region’. 18 In
order to achieve this, Toyota says that it complies with local, national, and
international laws and regulations, and behaves with honesty and integrity. To
achieve this, it believes that how it interacts with stakeholders is key, and it
comments that ‘we will endeavour to build and maintain sound relationships
with our stakeholders through open and fair communication’. Toyota also
expects its business partners to support its CSR policy.
Toyota focuses on CSR policy in a number of key areas, including:
 customers – to develop high quality, innovative and safe products and
services ‘to enrich the lives of people around the world’ and also to
protect customer/partner data
 employees – based on respect of employees, harnessing creativity and
teamwork and supporting personal growth; to support equal employment
opportunity/diversity and provide a safe and healthy working
environment; Toyota wants ‘Mutual Trust and Mutual Responsibility’, by
working together; to promote ethical behaviour
 business partners – to foster long-term relationships to realise growth;
based on mutual trust, Toyota wants ‘fair and free competition’ based
on the laws and regulations of each country and region it operates in
 shareholders/investors – to improve corporate value by achieving
constant and long- term growth; to provide accurate disclosure of
operating results and financial condition
 environment – whilst growing, to foster ‘harmony with the environment’ to
lessen the environmental impact of business operations, in areas such as
climate change and biodiversity; to use and develop technologies that
don’t harm the environment, and to have cooperative relationships with
individuals/organisations involved in environmental preservation
 community – to respect each country’s and region’s culture, values and
laws; to maintain honest and fair relationships with governments and
public authorities; to follow ‘sustainable mobility’ principles in safe and
clean technologies
 social contribution – to pursue business activities that ‘help strengthen
communities and contribute to the enrichment of society’.19
Toyota states that it wants to reinforce the brand in order to attract more
customers. It focuses on three pillars. The first is ‘Start Your Impossible’, which is
a global corporate campaign, launched in 2017. This reflects Toyota’s aim of
fully becoming a mobility company for all. This campaign is aligned with
Toyota’s sponsorship strategy as a worldwide partner of the Olympic and
Paralympic Games.

18
[Link]

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[Link]

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The second pillar is eco-cars, and Toyota aims to have zero CO 2 emissions in
the future, transforming the way the cars are made with the mission of
protecting the Earth. The third pillar is motor sports through GAZOO Racing.
Toyota’s continued involvement in motor sports is a key pillar due to it
enhancing the performance and love of cars.

Toyota is ranked at 11th with a brand value of $41.5 billion as per Forbes’ annual
list of the world’s most valuable brands – which looked at the top 100
companies from fiscal year 2019. Toyota is well known for manufacturing
family-oriented vehicles that rarely break down and are relatively reliable, safe,
affordable and economical.20
However, Toyota has had some reputational issues, and as identified in the
timeline above, customers were affected by some of Toyota’s products when
there were recalls in 2014 and 2015 due to faulty airbags. More recently, in
2018 it recalled more the 2.4 million hybrid vehicles worldwide because of a
fault that could cause the cars to lose power. This applied to cars made between
2008 and 2014 on its Prius and Auris models and included 1.25 million in Japan,
830,000 in North America and 290,000 in Europe, of which about 55,000 are in
the UK.
There have also been issues for Toyota employees. For example, in the 1990s
Toyota was in the spotlight for the long working hours and tough working
conditions for its employees, when the demand for employees exceeded supply
in Japan. Toyota responded by enhancing its pay/salary structures, and by
investing in workforce ergonomics, e.g. better lighting, adjustable platforms, and
other improvements that made life at the assembly line easier.
Toyota also invested in training, redesigned assembly lines and changed shift
patterns.21
In 2004, a serious accident occurred in one of Toyota’s factories in Japan, and in
2008 the company was in the media for working conditions at its factory in the
city of Toyota (Japan), with allegations that it relied heavily on sweatshop labour
from China and Vietnam.22

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Consumer behaviour
As customer tastes and technologies are evolving faster than ever, the
business environment is becoming more competitive. For competitors,
mobility services that go beyond the conventional car sales business are
becoming prevalent.
Market saturation is also an issue, due to developed markets reaching the peak
in terms of the total amount of cars that consumers are purchasing. As a result,
rideshare services and car-sharing options are replacing personal vehicles in
densely populated areas in the developed world.
Many consumers are also prepared to wait longer to purchase a car, due to
technology advancements and electric vehicle and hybrid production,
where competition is intense around the world.
Car sales in China were down 12% in 2019, and China’s car market is slowing as
more cities become saturated and tax incentives reach their expiration. 23 India's
consumers are following a similar trend, with sales dropping 14% in 2019.
Furthermore, with the automotive industry undergoing major changes, partly
due to the implementation of electric and hybrid vehicles, companies are
looking at initiatives to improve customers’ lifestyles and improve the
convenience of society as a whole. They are doing this by creating added value
through financial services across a car’s life cycle, from its initial manufacture
to disposal.
With this in mind, Toyota Fleet Mobility was established as a joint venture with
KINTO Corporation in Japan and is dedicated to expanding leasing services in
European countries. Here consumers can own and drive cars on a monthly
subscription basis.
Consumers also want innovative financial services with cutting-edge
technologies, and Toyota is addressing this by providing building infrastructure
for payments and working on blockchain technology (for example, technology
structures that store transactional records).
Consumer lifestyles are changing due to the rapid deployment of Internet of
Things (IoT) technologies24. This system of interrelated computing devices and
mechanical and digital machines to transfer data, without human-to-human or
human-to-computer interaction, is taking hold in such areas as home appliances
and household equipment, as well as mobility.
Consumers’ mobility has drastically changed due to the worldwide coronavirus
pandemic, which has forced people to work from home in a lot of countries. For
example, in Europe restrictions were put in place in March 2020 in countries
such as the UK, Italy, Spain, Germany, France, Austria and Portugal, where
nationwide ‘lockdowns’ were introduced to curb the coronavirus. In these
lockdowns, residents were ordered to stay at home and were only allowed
outside for essential requirements, for example, to go shopping for groceries, to
the pharmacy or doctor’s, and in some countries for limited exercise.

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23
[Link]
october-
2019
24
The interconnection via the Internet of computing devices embedded in everyday
objects, enabling them to send and receive data. Oxford Dictionary.

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Non-essential shops in many countries have been closed, as have restrictions
on travel, including travel to work. All non-essential international travel has also
been banned in all of these countries. 25
Many countries across the world have had similar lockdowns, with China and
India having a ‘total lockdown’ for a period of time, whereby residents were not
able to leave their homes for any reason. 26 This pandemic will inevitably have an
impact on motor sales in 2020, but may also have an impact longer term on
workplace policies, and result in the potential reduction of the requirement for
transport and cars in particular, (for example, working from home policies may
continue in the future).

25
[Link]
52905137
26
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Competition
Against gloomy predictions of a sizeable slump in global motor sales in 2019
for the fourth consecutive year, automobile sales still managed to top 17
million units (17.1 million).27
Another measure of the competitive environment is the calculation of the world’s
most valuable automobile brands. In 2019 Mercedes Benz was the world's most
valuable automobile brand, valued at $60,355 million, up 25.9% from 2018. In
2019 Toyota was ranked second with a value of $52,291 million, up 19.7% from
2018. Volkswagen was third, with a brand value of $41,739 million, up 4.5%
from 2018.28
Toyota’s key competitors are as follows:
Volkswagen AG
Founded in 1937 in Germany, Volkswagen is one of the world’s leading
automotive brands. It is the largest carmaker in Europe. Its products include
passenger cars, luxury sedans, sport utility vehicles, buses, coaches, heavy
trucks, marine and industrial engines. Its services include financing, leasing,
banking and insurance, and fleet management. Under its umbrella are the
brands Audi, Bugatti, Skoda, Volkswagen, Lamborghini, SEAT, Bentley, Porsche
and Ducati.29 Volkswagen Group is paving the way for the biggest change
process in the history of the automobile, in ‘the realignment of one of the best
carmakers to become a globally leading provider of sustainable mobility’.30
Key metrics: in 2019 it was the largest vehicle producer, with 10.4 million
vehicles. In 2018, Volkswagen had sales revenues of $269.9 billion, up 2.7%
from 2017. It had 302,554 employees, and whilst Europe is by far its biggest
market, it expanded its operations in South America by 13.1% from 2017 to
2018.
Daimler AG
Daimler, founded in 1926 as Daimler-Benz, is a German brand that
manufacturers a range of cars, trucks, vans and buses. It also offers
automotive services and automotive financial services, including financing,
leasing, insurance, and fleet management. Daimler has 8,500 sales centres
worldwide and production facilities in 19 countries. 31
The company operates through five business segments: Mercedes-Benz
Cars, Daimler Trucks, Daimler Financial Services, Mercedes-Benz Vans, and
Daimler Buses.
Key metrics: in 2018 it produced 3.4 million vehicles, up 2.4% from 2017. In
2018 it had sales revenues of $191.8 billion, up 2% from 2017. 32 In 2018
Daimler had 298,683 employees.
Bayerische Motoren Werke AG (BMW)
Founded in 1916, BMW is a German brand that develops, manufactures and
sells engines and vehicles, including automobiles and motorcycles. The
company also provides financial

27
[Link]
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28
Appendix 2 - The worlds top 10 most valuable automobile brands. Brand Finance.
29
Company Profile Volkswagen AG (2019). MarketLine.
30
[Link]
31
Company Profile Daimler AG (2019). MarketLine.
32
[Link]

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services. BMW has 3,400, 1,580 MINI, and 140 Rolls-Royce dealerships
worldwide. It sells vehicles through three prestige brands: BMW, MINI, and
Rolls-Royce. In 2018, BMW operated 30 production and assembly facilities in
14 countries, and had a global sales network in more than 140 countries. 33
Key metrics: in 2018 it produced 2.49 million vehicles, up 1.1% from 2017. In
2018 it had sales revenues of $98.4 billion, up 0.1% from 2017. In 2018 BMW
had 134,682 employees.34
Ford Motor Company
Founded in 1903, Ford is an American brand and its products include cars,
crossovers and sport utility vehicles, trucks, vans, hybrids, commercial trucks,
fleet vehicles, vehicle accessories, and after-sales vehicle parts. The company
primarily operates in North America, Europe, Asia-Pacific, South America, and
the Middle East and Africa. The company’s primary brands are the Ford and
Lincoln.35
Key metrics: in 2018 it produced 5.98 million vehicles. In 2018 it had sales
revenues of
$160.3 billion. In 2018 Ford had 199,000 employees. The USA accounted for
62.3% of the company's revenues, followed by the UK with 7.7%; Canada with
6%; Germany with 4.6%.36
Nissan Motor Company Ltd
Founded in 1928, Nissan is a Japanese company that manufactures and sells
passenger vehicles, minivans, wagons, commercial vehicles, trucks, zero-
emission vehicles and sport utility vehicles. It also provides sales finance and
leasing services to consumers and dealerships. The group has the brands
Nissan, Infiniti, Datsun and Heritage under its umbrella. It operates through its
retail outlets in Japan and countries across Europe, the Middle East, Africa,
Asia-Pacific and the Americas.37
Key metrics: in 2018, it produced 1.34 million vehicles, down 9.9% from 2017.
In the same year Nissan had sales revenues of $110.5 billion, down from $114.2
billion in 2017. It had 138,893 employees. 38

33
Company Profile BMW (2019). MarketLine.
34
[Link]
en/2019/g
b/BMW-GB18_en_Finanzbericht_190315_ONLINE.pdf
35
Company Profile Ford Motor Company (2019). MarketLine.
36
[Link]
[Link]
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37
Company Profile Nissan (2019). MarketLine.
38
[Link]

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Honda Motor Co., Ltd
Founded in 1948, Honda is a Japanese manufacturer of automobiles and
motorcycles. Honda also makes power products, including snow throwers,
lawnmowers, aircraft and jet engines. It also has ventures in robotics and
advanced technologies, with a primary focus on the environment and
sustainability. In addition, the company invests in motorsports events like Moto
GP and Formula 1. Honda has operations spread across different geographies,
including, Asia and Oceania, the Americas, Europe, Africa and the Middle East.39
Key metrics: in 2019, Honda produced 5.3 million vehicles, up by 124,000 from
2018. In 2018 Honda had sales revenues of $146.7 billion, up from $133.6 billion
in 2017. In 2018, it had 215,638 employees. 40 Honda operates in 150 markets
globally.
Volvo Car Corporation
Founded in 1927, Volvo is a Swedish automobile company. It manufactures a
wide range of cars, including sport utility vehicles, wagons and sedans. It also
provides fleet sales and concept cars. The company has research and
development, manufacturing, sales, and customer service operations in
Sweden, the Americas, Belgium and China. It sells cars through a network of
2,300 dealers in more than 100 countries. 4142
Key metrics: in 2018 Volvo had 2,300 dealers in more than 100 countries, up by
12% globally from 2017. In 2018 Volvo had sales revenues of $26.7 billion, up
from $20 billion in 2017, and 43,000 employees. In 2018 50% of its sales came
from Europe, 20% from China, 15% from the USA and 15% from the rest of the
world.43
Hyundai Motor Company
Founded in 1967, Hyundai is a South Korean automobile manufacturer. It
operates the world's largest integrated automobile manufacturing facility, which
has an annual production capacity of 1.6 million units. Hyundai also has
manufacturing plants in North America, India, the Czech Republic, Russia, China
and Turkey, as well as Research and Development centres in Europe, Asia and
North America.
Key metrics: in 2019 Hyundai produced 4.42 million vehicles, down from 4.59
million in 2018. It had sales revenues of $83.5 billion, up from $81.1 billion in
2018. In 2018 Hyundai had 120,000 employees. 44

39
Company Profile Honda (2019). MarketLine.
40
[Link]

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41
[Link]
42
Company Profile Volvo (2019). MarketLine.
43
Driving Prosperity. Annual and Sustainability Report. Volvo Group (2018).
44

[Link]
financial- statements/hyundai-motor-company-fy-2018-consolidated-
[Link]

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Global issues, market trends, constraints and challenges
The global outlook has changed. In particular, this may impact upon Toyota’s
strategic
priorities identified earlier in this case study.

The general downturn in the global car market since the middle of 2018 affected
global manufacturing, and the car sales prediction is a declining market. In
2019, the global car market contracted by 4%. However, new car sales
increased in Brazil and Europe; in Japan, Russia and the USA, markets were
weaker, while the car market in China and India saw a sharp decline. 45 In China,
this fall was 11%, and in countries such as Germany that are expecting a
recession, automobile companies like Audi have announced job losses of 7,500
employees.
Whilst interest rates in the USA where expected to remain the same for 2020
rather than fall as first predicted in 2019; the coronavirus pandemic has meant
the USA government has cut interest rates from 0.25% to 0% in order to combat
a recession.46 In the USA, businesses are worried about international trade, which
has resulted in a decline in spending. However, in the USA the manufacturing
sector struggled in 2019, as the US-China trade war took effect. Globally, things
did not look much better, and weak auto sales across the board have added to
the whole manufacturing outlook.47
It is expected that global car sales won’t reach 2018 levels until 2022,
when sales will recover to 84 million vehicles. 48
Business spending could surge if the USA settles its outstanding trade
disputes.49 However, if it imposes more tariffs on China and other countries
exporting to the US, the automobile market may struggle.
In response to saving CO2 emissions, countries around the world are investing in
the global hybrid and electric car market. 50This market grew from $63.3 billion
in 2014 to reach a value of $134.2 billion in 2018. From 2017 to 2018 the
market grew by 28.3%.
Between 2014 and 2018, unit sales in new global hybrid and electric cars
increased from 2,188,714 to 4,685,120.
In terms of the categories, unit sales for the hybrid market accounted for
70.8% in 2018, whilst the electric car market comprised 29.2%.
In terms of geographic regions, Asia-Pacific accounts for 55.2% of the global
hybrid and electric cars market by value, whilst Europe accounts for 24.5%, with
the US accounting for 18.8%.51

45
[Link]
car-sales/
46
[Link]
agrees-buy- more-bonds/5054943002/
47
[Link]
[Link]
48
[Link]
than-4-million- in-2019-report/#fb47bd226320

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49
[Link]
remaining-low- throughout-2020/#46edf3555395
50
See Appendix 3 - Global hybrid electric cars market value and units: $ million 2014-
18
51
MarketLine, Global and Hybrid Electric Cars, May 2019.

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52
From 2018 to 2023, the global hybrid and electric cars market is projected to
increase by 167.8%, from $134.2 billion to $359.4 billion. Over this period the
average compound growth rate is projected to be 21.8% per year. In terms of
new units sold, the market is forecast to increase by 180.2%, to reach
13,128,512.1.53
With the development of the global and electric car market also come
infrastructure challenges, and only a few countries worldwide have an extensive
network of charging stations. For example, the USA, Germany, the Netherlands,
Norway and Japan do have good networks and are lucrative markets; however, in
other countries, both governments and the motor industry will need to work hard
to get the charging infrastructure in place to match demand.

In the near term, in the UK the nature and impact of Brexit 54 and the UK’s
departure from the European Union (EU) still remain highly uncertain. It has
been suggested that Brexit could impact upon not only the UK automotive
sector, but also the European and global automotive sector. Since Boris Johnson,
who became Britain’s Conservative Prime Minister in July 2019, ruled out any
compromise on the terms of withdrawal, the UK left the EU on 31 January 2020,
with a transition period of following EU rules until the end of 2020. 55 There are
still many issues to be resolved in their future relationship, which means there is
still uncertainty about the working arrangement between the UK and EU and
ultimately the global economy.
Brexit, along with further USA-China tariffs, could indicate that the global
economy will lose confidence and weaken investment in markets. These tariffs
could raise the costs of crucial car-building materials, impacting on
manufacturers' profits. These developments could inhibit local supply chains
and slow global growth.56
Reputation and trust are key in the automobile industry, and consumers are still
wary of switching brands. The challenge for Toyota is to enhance its reputation
without being left behind by the competition. This is particularly true in the case
of hybrid and electric vehicles and the innovative new products that will flood the
market in forthcoming years. In addition, Toyota needs to be careful that product
recalls do not damage its reputation.
Technological innovations are massive challenges to the automotive industry.
The trend toward autonomous and electric vehicles is proving expensive as well.
The new technologies involve significant research and development costs, as
well as overhauled production lines to accommodate battery packs, road
sensors, and complex wiring looms. 57
Asia has been growing for the past 30 years and is still growing. Whilst
emerging markets such as China and India relax their foreign direct investment
restrictions, there is a great opening for Toyota to look for more joint ventures
and partnerships, and to take advantage of first-mover opportunities.
Customers look for manufacturers with excellent international

52
See Appendix 4 - Global hybrid and electric cars market value forecast: $ million
2018-2023
53
MarketLine, Global and Hybrid Electric Cars, May 2019.
54
The United Kingdom voted to leave the European Union in March 2016, and this exit
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– commonly known as Brexit – was delayed until January 31, 2020.
55
[Link]
56
[Link]
57
[Link]
october-
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networks. Foreign direct investment is set to continue and at an accelerated
growth for Toyota.
The coronavirus presents challenges to the global economic outlook, with global
economic impacts difficult to assess, but the potential is significant. Factory
shutdowns in Wuhan (where the virus originated) may appear insignificant in the
worldwide total manufacturing output, but Italy shut its borders in response to a
significant outbreak of the virus, and other countries are experiencing similar
issues. Complex global supply chains mean that factory shutdowns can trigger
production stops at other factories; this may impact upon the automobile
component supply that are used to build the motor vehicles. 58
Stricter pollution laws are being rolled out across the EU and China, which
may force companies to spend more on lower-emissions technology.
Automakers face greater pressures on their margins as regulation and trade
tensions hit their core businesses, due to conflicts between the USA and China
and also the impact of Brexit, mentioned above.
In recent years, the average duration of car use has been lengthening. In 2019,
the average length of use of passenger vehicles in Japan was 13.2 years, 1.6
years longer than a decade earlier. Therefore, the role of after-sales service is
becoming increasingly important, with more than 100 million Toyota vehicles
currently in use worldwide.

58
[Link]
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Future outlook for global markets
The automotive industry is slowing faster than expected, and this shift brings
potentially massive economic threats to global markets. According to the
International Monetary Fund (IMF), the automotive sector represented 20% of
GDP slowdown in 2018 and approximately 30% of 2019’s drop in global trade. 59
This, coupled with the global coronavirus pandemic and the halting of
automotive manufacturing, means that many countries have seen big reductions
in recent sales. For example, China saw car sales drop by 92% in February
202060 and in the UK sales went down by 97% in April 2020. 61 Whilst there is
some recovery in the world’s economies, there is global uncertainty and a likely
global recession.
If these threats to automotive supply and demand continue into 2021 and as
car saturation peaks in wealthier regions, sales across the world and in
particular developing markets struggle to cover the difference.
However, there may be opportunities due to consumers abandoning public
transport because of the global coronavirus pandemic, thus increasing the
demand for cars.62 63Furthermore, electric car sales in Europe gained market
share in April 2020 and this trend could be set to continue in other parts of the
world.
In the future the IoT will connect cars, public transportation and other means of
transportation. Moreover, information links will connect all items and services
that support our daily lives, and the idea of a ‘connected city’ will encompass
the entire community and society, including cars.
The governments of countries all over the world now recognise the need to
protect the environment and to reduce CO 2 emissions, and as a result there is
more pressure on motor companies and consumers to consider alternative fuel
options, in order to limit the effects of pollution. As a result, this pressure should
see rapid developments in the hybrid and electric car market.

59
[Link]
october-
2019
60
See Appendix 5 - [Link]
61
[Link]
62
[Link]
transport-as- a-result-of-covid-19/
63
See Appendix 6 - [Link]/business/2020

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APPENDIX 1

Global Perspective/Data by Region

Asia
(excludin North
Europ g Japan Othe America
e Japan) r
Number of
Plants and
Manufacturi
ng 8 24 17 8 10
Companie
s
Distributo 29 20 - 113 5
rs
R&D 3 4 6 - 3
Sites

Source: Toyota Motor Corporation Annual Report 2019

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APPENDIX 2

The world’s top 10 most valuable automobile brands

2018 2019 % Increase/

Brand $ $ Decrease
million million

1 Mercedes- 47,936 60,355 +25.9

Benz %
2 Toyota 43,701 52,291 +19.7
%
3 Volkswagen 39,960 41,739 +4.5%
4 BMW 41,790 40,501 -3.1%
5 Porsche 19,055 29,347 +54%
6 Honda 22,132 25,744 +16.3
7 Audi 14,951 19,638 +31.4
%
8 Ford 18,172 18,772 +3.3%
9 Nissan 19,376 18,753 -3.2%
10 Volvo 12,635 13,772 +9.0%

Source: Brand Finance Automotive Industry,

March 2019 Reproduced with kind permission

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APPENDIX 3

Global hybrid electric cars market value and units: $

million 2014-18

$ % %
Yea million Growt Units Growt
r h h

201 63,371 2,188,71

4 4
201 65,809 3.8% 2,268,68 3.7%
5 9
201 82,163 24.9% 2,840,57 25.2%
6 8
201 104,56 27.3% 3,600,22 26.7%
7 1 3
201 134,19 28.3% 4,685,12 30.1%
8 4 0

*CAGR:
2014- 20.6% 21.0%
2018

*CAGR – Compound Annual Growth Rate

Source: redacted from MarketLine, Global and Hybrid Electric Cars, May 2019

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APPENDIX 4

Global hybrid and electric cars market value forecast: $ million

2018-2023

Yea $ % growth
r million

201 134,194 28.3%

8
201 166,434 24.0%
9
202 210,567 26.5%
0
202 254,921 21.1%
1
202 299,100 17.3%
2
202 359,400 20.2%
3

*CAGR
: 2018- 21.8%
23

Global hybrid and electric cars market: unit forecast, 2018-2023

Yea Units % Growth

r

201 4,685,320 30.1%

8
201 5,908,291 26.1%
9
202 7,613,445 28.9%
0
202 9,144,690 20.1%
1
202 10,908,050 19.3%
2
202 13,128,512 20.4%
3

*CAGR
: 2018- 22.9%
23

*CAGR – Compound Annual Growth Rate

Source: redacted from MarketLine, Global and Hybrid Electric Cars, May 2019

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Appendix 5

Coronavirus: Car sales in China fall 92% in February

1 February 2020

Car sales in China fell 92% in the first half of February as the
coronavirus shutdown took its toll, according to an industry
trade body

Car dealerships have remained closed while buyers have stayed away to
prevent the spread of the deadly virus. Nationwide car sales slumped 96% in the
first week of February to a daily average of just 811 vehicles.

The China Passenger Car Association (CPCA) said it hoped sales would pick
up as more showrooms reopened.

"There was barely anybody at car dealers in the first week of February as
most people stayed at home," said CPCA secretary general Cui Dongshu.

Dealers have gradually restarted operations this month, and the automobile
trade body is hoping sales will improve during the second half of February.
Chinese car maker Geely has just launched a "contactless" service that lets
customers buy its cars online and get them delivered directly to their homes.

China is the world's biggest car market, selling just over 21 million cars last year,
according to Statista. The US is the second biggest market.

Even before the deadly outbreak, car sales in China were in decline due to a slowing
economy and trade tensions with the US.

While car sales have slumped, production has also been severely disrupted with
many of the world's biggest car makers warning of delays.

Many car companies had expected to restart operations in China this week. But even
those firms that have re-opened some locations have warned it will take longer to
return to full capacity than expected.
It is not just car makers who are suffering disruptions in China, known as "the world's
factory". Global manufacturers are also facing production delays.

Source: [Link]/news/business
Used with permission
Copyright  [Link]

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Appendix 6

Electric cars gain market share in Europe despite Covid-

19 crisis

Jasper Jolly
Tuesday 2 June 2020
The Guardian, 2 June 2020

Data suggests that carmakers are making progress towards meeting

emissions reductions targets

Electric and hybrid cars gained traction among European buyers in April despite
coronavirus lockdowns stalling the market, suggesting carmakers are likely to
avoid potential fines, potentially worth billions of euros, if they fail to reduce
average emissions.

Battery electric vehicles, plug-in hybrids and other hybrid cars accounted for
17% of sales across all European markets, including the UK, in April, according
to data collated by industry analysts Jato Dynamics. That was more than double
the 7% market share achieved in April 2019.

The data show buyers were more likely to opt for electric and hybrid cars even
as overall sales fell dramatically. Total car sales, including petrol and diesel
models, fell from 1.34m units in April 2019 to 292,600 vehicles in April 2020,
the lowest level since the 1970s, Jato said.

Sales of battery electric cars fell by 29% during the month compared with the
previous year, but performed far stronger than the 78% decline seen across the
market as a whole as sales of petrol and diesel cars decreased much faster.

Sales of plug-in hybrid cars rose by 7% according to Jato. Volkswagen, Volvo

and Ford all benefited from strong growth in sales of plug-in hybrids.

The data suggests that – if the market share gains are sustained as showrooms
in the UK and Europe reopen, carmakers are making progress towards meeting
emissions reductions targets that came into force at the start of the year. The
targets are based on average emissions of all cars sold in the EU and the UK in
2020 and 2021.

Felipe Munoz, an analyst at Jato, said: “EVs were already driving part of the
small growth that remained in 2019. This year, as governments have acted
quickly to protect their people and economies, EVs have gained even more
traction and visibility due to incentives.”

However, the increase in plug-in hybrid sales appears to corroborate analyst

predictions that hitting the targets would be achieved largely through sales of
cars that still emit large amounts of carbon dioxide in many cases.

Carmakers are pushing for the EU and the UK to introduce further subsidies to
support the car industry. The industry employs 13.8 million people across
Europe, according to the European Automobile Manufacturers’ Association.

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The carmakers are pushing for subsidies to apply to fossil-fuelled cars as well as
electric vehicles, which has drawn protests from environmental campaigners and
politicians who want electric models to be prioritised as consumers are
encouraged to avoid public transport for health reasons.

Source: [Link]

Used with permission

Copyright  Guardian News & Media 2020

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