- Introduction. 1
- Moving manufacturing for European Sale to Europe. 2
- The possibility of Britain joining the European Monetary Union (EMU) 3
3.1 The benefits derives from the joining of Britain in the European Monetary Union toward Toyota 3
3.2 The possibility of the participation of UK in the European Monetary Union. 4
- Categorizing Toyota’s problems in short-term and long-term in Europe. 5
- Measures to resolve the continuing operation losses of Toyota in Europe. 7
5.1 Short term solutions. 7
5.2 Long term measures. 8
- Conclusion. 9
- References. 10
Toyota Motor Corporation (TMC) is an international company founded in 1937 and headquartered in Tokyo, Japan. Toyota was the largest automobile manufacturer, which engages in the design, manufacture, assembly, and sale of passenger cars, minivans, commercial vehicles, and related parts and accessories in 2013 (by production). As the figures in Toyota’s financial statement the fiscal year ended March 31, 2014, on a consolidated basis, net revenues for the period totaled 25.69 trillion yen, an increase of 16.4 percent compared to the previous fiscal year, 22 trillion yen in 2013 (Exhibit 1).
Toyota Motor Corporation Announces Financial Results for Fiscal Year Ended March 31, 2014
In the market, Toyota Motor Corporation (TM) is the leading business with a global 11.8% market share in 2013 (See Exhibit 2).
Since Toyota established its first manufacturing plant Toyota Motor Manufacturing France S.A.S. (TMMF) in France to produce Yaris (Vitz) in 2001, it has expanded the production widely in many countries of Europe. The newest plant – Saryarka AvtoProm LLP (SAP) – was built in May 2014 in Kazakhstan is a proof for its success in this market in terms of strategy to resolve the issue of depreciation of Euro against Japanese Yen. As of the end of Dec 2014, Toyota conducts its business worldwide with 54 overseas manufacturing companies in 27 countries and regions. Toyota’s vehicles are sold in more than 170 countries and regions.
2. Moving manufacturing for European Sale to Europe
In the situation of Yen was rising against the euro before year of 2002, the cost of manufacturing became increasingly more expensive for Toyota while the revenue in selling Japan-produced cars in their European market was down due to the depreciation of Euro. This solution is advisable to implement relocation manufacturing plants to Europe promptly to keep the competitiveness but why Toyota had waited so long to move much of its manufacturing for European sales to Europe. It can be explained by reasons as below:
Firstly, as the automobile industry is very capital intensive and building a new plant in foreign country is very costly, which would be a big pressure, even for a big company like Toyota. Also, it is very time consuming and complicated to relocating the manufacturing. As the movement process seems need performing step by step carefully then Toyota showed their prudence in moving much of its manufacturing for European sales to Europe.
Secondly, Toyota wished to continue to pursue and take advantages from economies of scale in manufacturing as long as possible, and had resisted on the changes. Also, Toyota looked at the problem very optimistically before through the statistic number of manufacturing ratio in Europe and its market share: only 26% of the cars sold in Europe were manufactured there, Europe was still ranked to be the second largest foreign market for sale. It showed that it was not the point that where cars were produced, the sales in Europe were still very good. Thus, moving manufacturing locally was not a pressing issue.
Third, exchange rate fluctuation seemed to be very elusive. As we can see throughout 1999 and the first half of 2000 the yen strengthened against the euro but the euro also regained some ground in late 2000, it bring the difficulty for administrators of Toyota to carry out any forecast for the near future. Therefore, they need time to fully assess before taking any solution to convince the board of directors……….