Business Managment

Toyota’s Strategy and Initiatives   in   Europe

The Launch of the Aygo

"Since 2000 the output of the global [auto] industry has risen by about 3 million vehicles to some 60 million: of that increase, [more than] half came from Toyota alone. While most attention over the past four years has focused on a spectacular turnaround at Nissan, Toyota has undergone a dramatic growth spurt all round the world."
—The Economist, January 29, 2005: 61

For Toyota Motor Europe (TME), locally designed cars and the availability of diesel engines led to impressive results: 2005 was the ninth consecutive year of record sales for Toyota in Europe. Sales grew by almost ,50% from 2000 to 2005. The new strategy paid off financially, too. According to Business Week, the operating profit increased nine-fold to $654 million in 2003. After plant openings in France, Turkey, Poland and the Czech Republic, local production was expected to reach 60% in 2006. This lowered exposure to exchange rates and import tariffs. Within Toyota, sales increases from Europe were needed to meet ambitious global sales targets. .
    But for the European marketing team of Toyota's Aygo minicar, the challenge continued. In a fiercely competitive market they had to find 100,000 buyers annually for the 3.41-meter Aygo. This segment was seen as a difficult market: low prices meant low margins. Mercedes-Benz's "MCC smart" recorded losses of €4 billion between 2000 and 2005.1 Other competitors also had difficulties making money in this segment.
    With the launch of the Aygo, Toyota challenged many of its traditional views: the car was specifically designed for the European market and exclusively sold there. The factory was a 50/50 joint venture with the Peugeot/Citroen Group (PSA) in the Czech Republic. But for the marketing managers of the Aygo the challenge was how to sell the 100,000 units annually they guaranteed to buy from the factory in the Czech Republic.

Toyota Global: Becoming Number 12... [continues]

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