Porter’s Five Forces Analysis of Toyota Motor Corporation
|Name||Toyota Motor Corporation|
|Revenues||US$ 257 BillionApprox.,2022 (Statista) /279.3 Billion by Fortune /31.38 Trillion Japanese Yen (As of March 2022) Annual Report|
|Profit||US$ 28.8 BillionApprox.,2022 / 25.7 Billion by Fortune|
|Competitors||General Motors, Volkswagen|
Headquartered in Toyota, Japan Toyota Motor Corporation, operates in Automotive, Financial and Other Services, is the leading automotive company in terms of market share by having highest global business share of 10.5% as of 2021, declared by Statista.It was founded by Sakichi Toyoda and launched first passenger car in year 1936.Its reported revenues are US$ 281.7billion with net assets valued at US$ 552.5 approx. billion, as of FYYear 2021.Toyota’sbrand value is estimated at US$ above 33billion, as of June 2022, declared by Statista.Toyota is ranked 13th by Fortune 500.Also ranked 10th in the Forbe’s World’s The Global 2000 Companies list.
Porter’s Five Forces Analysis
The most widely referred model to design companies’ strategies in reference to its industry for better profits and less exposure to competition is “Porter’s Five Forces Analysis”, defined byProfessor Micheal E. Porter in 1979,at Harvard Business School.
Toyota Rivalry among Existing Competitor
- Toyota Business Segmentation Geographical Car Sales : Toyota has the biggest market reference to Automobile Sales is North America with 27% share of Toyota’s Global Sales, while second biggest market is China with 20%,Japan 15% ,Other with 14%,Asia 13% and Europe with 11%.
- Toyota Business Revenue Analysis FY 2019-2022:Toyota gave a record recovery revenue sales of 31.38 trillion Japanese Yen as of FY (12 month) ending March 2022, while the impact of COVID-19 evident with an affected sales of 27.21 trillion Japanese Yen in FY 2021 ending March 2021.While the sales were 29.87 trillion Japanese Yen in FY 2020 and 30.23 trillion Japanese Yen in FY 2021 respectively.
- Toyota Business – COVID 19 Impact and Competitive Rivalry (General Motors & Tesla) :Toyota Motor’s biggest market as per car sales units North America also affected due to COVID-19 outbreak, resulted the U.S. vehicle sales dropped to 14.5 million units in 2020.Toyota sold 10.5 million units from January 2021 to December 2021.Toyota is facing tough competition fromGM and Tesla, as General Motors in North American Market ,as General Motors sold 6.83 million units in 2020.
- Toyota Electrification Region Wise :Toyota is heading very fast in global car electrification with the following rates region wise Europe 61%,Japan 41%,China 28% ,North America 25%,Other 16% and Asia 7% respectively.
- Toyota Electrifications by Types: Toyota is offering different types of electrifications including the following:Internal combustion Engine (ICE), Hybrid Electric Vehicle (HEV), Plug-in hybrid Vehicle (PHEV), Battery Electric Vehicle (BEV) and Fuel Cell Electric Vehicle (FCEV).
- Battle of the Brands Global Automotive Industry is having a fierce battle of the brands where Toyota is competing all by having 5% market share of the total global business volume. While Volkswagen possess6.4%,Hondapossess 5.3%,Fordpossess 5%, Hyundai possess 4.7%, Nissan 4.6% and Chevrolet 4.4% market share of the total global automobile business.
- Volkswagenis the second largest global brand as per market share also giving tough competition to Toyota Motors, Volkswagen gave record recovery revenues of 250.2 billion Euros in FY 2021,compared to previous year 222.8 billion Euros in FY 2020 which is a raise of 13% respectively.
- Hondaalso giving tough competition to Toyota Motors by following Toyota and Volkswagen in global market share, gave a record recovery revenue of US$120.48 Billion (13.17 trillion Japanese Yen) in FY 2021.
- Ford also gave a record recovery revenue of US$ 136 Billion in FY 2021, compared to a year earlier which is US$ 127.1 Billion in FY 2020 which is an increase of 7% respectively.
Toyota Threat of New Entrants
- High End Technology – Luxury Brands: Toyota is producing High-End Technology for any new entrant arranging large capital investment, established supply chain, economies of scale are impossible grounds to compete.
- Brand Loyalty –Electrification Leadership: Toyota developed it’s expertise in producing high-end Luxury brand like Lexus and recently Electrification with a large Supply Chain Set Up and highly trained staff, so any new competitor can impossibly compete on all these grounds. Only in Europe 61% car drivers adopted Electrification with 57% HEV (Hybrid Electric Vehicle) and 39% shifted to ICE (Internal combustion Engine).
Toyota Bargaining Power of Suppliers
- Trustworthy and Established Supplier Relationship: Toyota has a long history of supplier relationship, only with in Europe Toyota has 500 Suppliers with a yearly spending over 5 billion euros.
- Recognition of Suppliers: Toyota is celebrating and honoring it’s suppliers time to time to have a close relation with suppliers. So overall Toyota is such an established brand and leading the global automotive industry so it is educating and influencing automobile supplier’s industry.
Toyota Bargaining Power of Buyers
- Customer Experience (After Sales Services – High End Brand Lexus- Electric Vehicles) In the present scenario when Toyota is advancing and leading in Electrification and producing high-end brand like Lexus high customer satisfaction and adaptability is the core of Toyota’s successful journey. Toyota has 370,000 trained staff globally with 170 + Sales countries and regions &66 Manufacturing companies. 20 Research & Development Centers globally.
- Research & Development: R&D is also one of the key components in the EV fashion of Toyota and remain in the winning position amongst the battle of the brands to better understand the customer requirements and better adaptability of the changing market requirements. Toyota has 20 Research & Development Centers globally
- Customer Satisfaction Toyota, Volkswagen, Honda and Ford:Toyota scored 84/100 in American Consumer Satisfaction Index(ACSI) in Year 2022, especially on its special luxury brand Lexus, increased by 3 point compared to previous year. Volkswagen scored 77/100 in Year 2021.While Honda scored 82/100 and Ford scored 76/100 in Year 2021.
- Bargain Power of Buyers: Toyota seems performing well on all metrics and having better scores which it should continue maintain as due to fiercely competition, any move by competitors give an indirect power to buyers to have more choices and influence the buyer’s decision making.
- Forbes, Profile ,Toyota Motor
- History of Toyota, Available at Toyota
- Fortune 500,Toyota,Available at Toyota
- Statista (August, 22,2021) Global automotive market share in 2021,by brand| Statista. Statista.Availableat.Statista
- Statista (September 20,2021) Toyota’s net revenue from FY 2012 to FY 2022 (in trillion Japanese yen)| Statista. Statista.AvailableatStatista
- Statista (February 7,2021) Number of General Motors vehicles sold worldwide between 2010 and 2021 (in millions)| Statista. Statista.AvailableatStatista
- Statista (November,29, 2022) |Volkswagen Group –Statistics & Facts | Statista. Statista.Availableat .Statista
- Statista (June,10, 2022) |Volkswagen AG’s sales revenue from FY 2006 to FY 2021 (in billion euros) | Statista. Statista.AvailableatStatista
- Statista (February, 10, 2022) Ford’s revenue from FY 2008 to FY 2021 (in billion U.S. dollar) – statistics & facts| Statista. Statista.Availableat Statista
- Annual Report 20-F Honda Motor Co Ltd
- Statista (September 08, 2022) Consumer satisfaction with selected Toyota brands in the United States from 2009 to FY 2022 (index score) – statistics & facts| Statista. Statista.Availableat Statista
- Statista (September 28, 2022) Consumer satisfaction with Volkswagen in the United States from 2006 to FY 2021 (index score) – statistics & facts| Statista. Statista.AvailableatStatista
- Statista (September 28, 2022) Consumer Satisfaction with selected Honda brands in the United States from 2013 to 2021.Statista.AvailableatStatista.
- Statista (December,13, 2022) Consumer satisfaction with Ford in the United States from 2006 to 2022 (index score) | Statista. Statista.AvailableatStatista
- Toyota Manufacturing UK, Supplier Relation, Available at Toyota
- Harvard Business Review,(October 20,2022) Don’t Abandon Your Just-In-Time Supply Chain, Revamp it. Available at Harvard Business Review
- CNBC (December 27,2022) 2023 Could be another difficult year for the auto industry –here’s why .Available at CNBC
- CNN Business (January 12,2023) Auto Sales are falling –but profits are surging. Welcome to the new normal. Available at CNN Business