Toyota Motor Corporation - Company Strategy & Performance Analysis
Toyota Motor Corporation (Toyota) is a manufacturer of automobiles. It undertakes the design, manufacture, assembly and sale of passenger cars, minivans, recreational and sport-utility vehicles, commercial vehicles such as trucks, and related parts and accessories. It also provides finance to its dealers and customers for the purchase or lease of Toyota vehicles. It operates manufacturing facilities in several cities across North America, Latin America, Africa, Asia-Pacific, Europe, and Middle East. Some of its main R&D facilities are in Japan, the US, and China. Toyota is headquartered in Toyota City, Aichi, Japan.
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Toyota recorded an increase in vehicle sales
Through the automotive segment, Toyota undertakes the design, manufacture and distribution of passenger cars, recreational and sport-utility vehicles, mini-vans and trucks. It is also engaged in the manufacture of accessories and various components for its vehicles. In FY2016, the company produced 8,975,509 units and sold 8,970,860 units. The company posted strong growth in Japanese and international markets. The active introduction of new products and the efforts of dealers nationwide contributed to growth in Japan. The growth in the overseas network is attributed to the sales expansion activities in Asia and Europe.
Increase in expenses related to credit and residual value losses affected the segment performance
Toyota’s financial services segment offers financing to dealers and their customers for the purchase or lease of Toyota vehicles. The segment also provides retail installment credit and leasing through the purchase of installment and lease contracts originated by Toyota dealers. The segment reported an increase in revenue of 7.0%, from US$15,316.8m in FY2015 to US$16,395.3m in FY2016. However, in local currency terms, it reported a decline of 3.8%. The increase in expenses, associated with the credit and residual value losses in sales finance subsidiaries, affected the segment’s profitability.
Successful implementation of strategies allowed this segment to report robust growth
Toyota’s all other segment includes the design and manufacture of prefabricated housing, and information technology related businesses including a web portal for automobile information called GAZOO.com. The segment has expanded its business in the area of intelligent transport systems; revenue increased by 38.9% from US$5,165.9m in FY2015 to US$7,177.8m in FY2016. However, in local currency, it reported an increase of 24.9%. Successful implementation of strategies such as strengthening its brand and competitiveness of its products enabled it to record robust growth. The company’s housing services business sold around 10,321 housing units.