Assignment 2 Case

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Toyota’s European Operating
Exposure
• It was January 2002, and Toyota Motor Europe Manufacturing (TMEM) had a problem
– Mr. Toyoda Shuhei, the new President of TMEM was on his way to Toyota Motor Company’s (Japan) corporate offices outside Tokyo to explain the continuing losses of European manufacturing and sales operations – The CEO of Toyota Motor Company, Mr. Hiroshi Okuda, was expecting a proposal from Mr. Shuhei to reduce and eventually eliminate the European losses. The situation was intense given that TMEM was the only major Toyota subsidiary suffering losses

• Toyota Motor Company
– Was the number one automobile manufacturer in Japan, the third largest manufacturer in the world by unit sales (5.5 million units or one auto every six seconds), but number eight in sales in Continental Europe. – The global automobile manufacturing industry had been experiencing, like many industries, continued consolidation in recent years as margins were squeezed, economies of scale and scope pursued, and global sales slowed

Toyota’s European Operating
Exposure
• Toyota was no different
– It had continued to rationalize its manufacturing along regional lines – Toyota had continued to increase the amount of local manufacturing in North America. In 2001 over 60% of Toyota’s North American sales were locally-manufactured

– In 2001 only 24% of the autos sold in Europe were manufactured in Europe (including the U.K.), the remainder being imported from Japan

• Toyota Motor Europe (TMEM)
– Sold 634,000 automobiles in 2000
– This was the second largest foreign market for Toyota (North America was first)
– TMEM expected significant growth in European sales, and was planning to expand European manufacturing and sales to 800,000 units by 2005. – For fiscal 2001 the unit reported operating losses of ¥9.897 billion ($82.5 million at ¥120/$).

– TMEM had three assembly plants in the UK, one plant in Turkey and one plan in Portugal
– In November 2000 Toyota Motor...
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