16 May 2011

Toyota Doing It Tough


I commented some time back about Toyota making too many cars in Japan. It didn't matter when the Yen was held to an artificially low level. Recent monetary upheavals have scuppered that policy. Now with slumping domestic sales and market share, a strong Yen, the fall out from the Tsunami and VW closing in quickly on the world's largest car maker, tough decisions must be made.

One of those involves a stand Toyota has maintained for more than 30 years, that of keeping domestic vehicle production above 3 million units. This was done for the benefit of Japan's economy and employment. Toyota has now decided walk away from this policy and review its domestic manufacturing operations due to the new economic realities.

The truth is, it cannot afford to maintain this policy anymore, so production offshore will be increased. This is something that should have been acted on sooner but there is no choice now. It is only a matter of time before VW Group passes Toyota to become world number one. Toyota needs to fight back and reducing expensive domestic production is a start. In the meantime, Toyota has to sort out the damage that the Tsunami wreaked upon Japanese manufacturing.

Summary: Toyota is a little vulnerable, indeed is doing it tough.

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