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Toyota
- 1. Japan Trip Presentation: TOYOTA Jose F. Rodrigues Neto Paolo Gencarelli Greg McKelvey Giulio Pappalardo Kazutoshi Tominaga
- 2. • Company Background • Car Industry Trends • Toyota Challenges & Strategies • Our Questions for Toyota AgendaAgenda
- 4. • Annual sales: $114 Billion • Production: ~5.8 million Units/Yr. • Employees: ~210,000 people • 56 manufacturing plants in 6 continents • 3rd largest automotive manufacturer in the global market Headline Facts: ToyotaHeadline Facts: Toyota
- 5. • Established in 1937 out of Sakichi Toyoda’s weaving machine company • Launched first car (SA Model) in 1947 • “Toyota Production System” formed in 1950 based on Just-In-Time principle • Overseas production starts in 1959 (Brazil) • In 1972, cumulative production >10M units • In 2002, entry in the Formula 1 circuit Company HistoryCompany History
- 6. • Automotive [90.0% Sales] – Design, manufacture and sales of passenger cars, recreational vehicles, SUVs and related parts • Financial Services [4.5% Sales] – Provisions of loans to car buyers and car dealers • Others [5.5% Sales] – Industrial vehicles (forklifts, etc.) – Pre-fabricated housing Business Segments -Business Segments - Low DiversificationLow Diversification
- 7. Japan Market (2000) Strong International Presence and DominantStrong International Presence and Dominant Position in the Domestic MarketPosition in the Domestic Market GM Ford T O Y O T A VW Daimler Chrysler Fiat Nissan PSA Honda Renault 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 Int’l Market (2000) In 1,000 Units
- 8. 8 Other 0,1 Asia 0,3 Europe 0,2 North America 1,1 Japan 3,5 Other 0,6 Asia 0,3 Europe 0,7 North America 1,8 Japan 1,8 Production Sales Toyota Production and Sales (MM Units) 21% 67% 12% 35% 35% 30% Balanced Global SalesBalanced Global Sales vs. Predominantly Export Based Productionvs. Predominantly Export Based Production
- 9. 3-year stock price comparison Strongest Stock Market PerformanceStrongest Stock Market Performance Relative to the IndustryRelative to the Industry
- 10. • Market Cap • 5-Yr CAGR Revenues • 5-Yr Pre tax Profit Margin • 5-Yr CAGR Earnings • ROE • $ 102 Bn • 3.0% • 7.3% • 17.3% • 9.5% • $ 43 Bn (DaimC) • 3.8% • 4.5% • –12.63% • 11.8% INDUSTRY Strong Financial PerformanceStrong Financial Performance
- 11. • Revolutionized manufacturing industry • At its core is “lean” principle – Relentless drive to improve efficiency and eliminate waste • Beginnings of TPS were born out of necessity due to lack of resources in post-war Japan Revolutionary Production SystemRevolutionary Production System
- 12. Toyota Production System:Toyota Production System: Key Main ConceptsKey Main Concepts • Just In Time manufacturing • Small batches which reduced inventory costs, tightened relationship with suppliers and improved quality control • Just In Time manufacturing • Small batches which reduced inventory costs, tightened relationship with suppliers and improved quality control • Low cost supplier • Low cost supplier • Asking “Why?” 5 times to locate source of problems • Stopping the production line whenever there are quality problems to ensure they are not repeated • Asking “Why?” 5 times to locate source of problems • Stopping the production line whenever there are quality problems to ensure they are not repeated • JIT• JIT • “5 Whys” Quality • “5 Whys” Quality • Long term supplier relationships• Long term supplier relationships
- 13. Car Industry TrendsCar Industry Trends
- 14. • Consolidation • Push to Emerging Markets for Growth • Global Emphasis on Small-Size Vehicles • Environmentally Friendly Products • Internet as a Key Enabler of Change of Automotive Retailing Car Industry TrendsCar Industry Trends
- 15. Drivers of ConsolidationDrivers of Consolidation Platform Sharing Purchasing Rationalization Capacity Rationalization Supply Base Rationalization Forge Strong VBO Relationships Integration of Production & Capability Sets Create & Manage Global Supply Network VehicleBrandOwnerSupplier Market Drivers Product Drivers NewCapabilitiesDrivers New Scale Economies in Production, Purchasing and Product Platforms Enhanced Market Penetration Progress Toward Integration Status New Scale Economies “Of the 20 auto makers in 1965, 14 have since merged or been taken over. By 2006, the top 14 VMs will account for 90% of light vehicle output.” Type Rationale Tactics
- 16. Growth by Region 1998-2006 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Asia- Pacific East Europe North America West Europe South America Africa / Middle East %ofGrowth Emerging Markets to Provide Long-TermEmerging Markets to Provide Long-Term Growth in Light Vehicle ProductionGrowth in Light Vehicle Production
- 17. Light Vehicle Segment % Growth 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% A B C C/D D Small-size Utility Small-size Van Mid-Size Utility Mid-Size Van Full-Size Pick-up Global Emphasis on Small-Size VehicleGlobal Emphasis on Small-Size Vehicle
- 18. Reduction in Polution Standards (Grams of NOx per mile) 0 0.5 1 1.5 2 2.5 3 3.5 1975 1977 1981 1994 1999 2004 -2009 Cars Smaller SUVs, Minivans, and Light Trucks (Less that 6000 lbs) Reduction in Emission StandardsReduction in Emission Standards
- 20. • Industry overcapacity • Economic downturn • Globalization • Environmental concerns • The IT revolution • Diverse and shifting consumer demand Toyota Challenges - SummaryToyota Challenges - Summary
- 21. Toyota’s StrategyToyota’s Strategy • Increase competitive strength through advanced technology • Promoting a global perspective • Value-driven cost reduction (CCC21 program) • Expanding the value chain—becoming the Total Mobility Services Provider • Expansion of model offerings—Quality, value, and style?
- 25. Our Questions to ToyotaOur Questions to Toyota
- 26. Toyota QuestionsToyota Questions • What do you see as the key elements to succeeding in the European market? • After Japan, U.S., and Europe, where do you see as the next critical market to Toyota’s globalization effort? – Emerging markets • What have been the most difficult challenges in the global implementation of “The Toyota Way?” • While sales continue to globalize, non-Japan production footprint appears to be leveling at 35%. What is Toyota’s strategic direction on “make where sell”? Challenges? • Does Toyota foresee Internet as viable infrastructure in purchasing, supplier relationships? How will Toyota integrate into TPS? • When do you think hybrid vehicles will reach critical mass? • What is Toyota’s view on industry consolidation and potential benefits of acquisitions / mergers? • How does Toyota’s recent initiatives reflect future strategic focus (e.g. new channel brand in U.S., participation in Formula-1)
- 27. Reduction in Emission StandardsReduction in Emission Standards
Editor's Notes
- Industry overcapacity—ADD STATS & IMPACT Economic downturn—ADD STATS, ability to stay in black during Japan’s difficult years Globalization—scale, maintain global scale and branding while competing locally and meeting diverse customer needs, global competition, Environmental concerns—increasing political pressure and customer interest The IT revolution—integrating IT in the corporation as well as integrating into the auto design Diverse and shifting consumer demand—environmental, safety, performance, value-added services, style
- -Technological development--Environmental technology (i.e. fuel consumption, emission, recoverability); Hybrid vehicles and next generation fuel cells; First automaker to mass-produce a hybrid vehicle -Promoting a global perspective—regional balance (1/3 sales from each region); push towards true ‘global’ corporation; conveying the “Toyota Way” to all global subs and inspiring them to follow it is vital to successful globalization; speed of implementation and roll-out on a global scale. -Enhancing cost competitiveness—CCC21, Construction of Cost Competitiveness 21), is aimed at further value-driven cost reduction of parts and materials (cost and quality improvements); Set quality and price targets first, then determine the appropriate functions, part quality and costs, R&D, production engineering and production.; platform integration, part modularity; supply chain joint efforts to reduce waste -Becoming the Total Mobility Services Provider—build and foster lifetime relationships with all customers; financial services (I.e. financing, credit cards), cell phones