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May 11, 2009 01:55 PM
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This is very interesting.
I don't think Toyota was ready for the new China market. They didn't have good partnerships in China - which is why they are building new car plants now - and they didn't understand how retail worked in China.
Retail apparently is very similar to the US, and is commission based. As the majority of buyers are first time buyers, I think this has a great influence on how a brand is perceived. If Toyota is out of touch when it comes to sales, they would suffer in their market share.
Another factor might be anti-japanese sentiment. We all know how the Chinese "hate" Japan, because of World War II and the atrocities Japan commited in China. This might have a big influence.
Source(s):
http://www.businessweek.com/globalbiz/content/mar2006/gb20060309_341430.htm
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What factors caused Toyota, in 2008-2009, too misread demand for small vehicles in China?
WSJ:
1. Why was Toyota late in recognizing the small car boom in China?
2. 2008 saw booming demand for small cars in China. GM and Nissan recognized profits from sales of small cars. While Toyota saw sales in China fall 17%. Hitoshi Yokoyama responded that big cars and SUVs will be popular sales in China. The responses seems disconnected from the fact that Chinese trends are purchases of small economical cars.
3. Small car demand rose 4% to 2.7 million vehicle sales. GM sales gained 17% to 363,317.
4. Japanese government will cut sales tax on the 1.6 liter engine vehicles.
5. China vehicles sales are shifting inland. Most of the sales have been along the coast line.
6. Toyota found itself with too many vehicles types that were not appropriately selling and not enough retail outlets to meet the demand of small vehicles. The Yaris and Corolla sales should have surged in 2008-2009.
7. Toyota will boost output by 65% of the 1.6 liter vehicle.
What caused Toyota to lose contact with the Chinese market and not have the appropriate number of small vehicles and outlets to match customer demand?
What is your opinion of Toyota leadership strategy?
1. Why was Toyota late in recognizing the small car boom in China?
2. 2008 saw booming demand for small cars in China. GM and Nissan recognized profits from sales of small cars. While Toyota saw sales in China fall 17%. Hitoshi Yokoyama responded that big cars and SUVs will be popular sales in China. The responses seems disconnected from the fact that Chinese trends are purchases of small economical cars.
3. Small car demand rose 4% to 2.7 million vehicle sales. GM sales gained 17% to 363,317.
4. Japanese government will cut sales tax on the 1.6 liter engine vehicles.
5. China vehicles sales are shifting inland. Most of the sales have been along the coast line.
6. Toyota found itself with too many vehicles types that were not appropriately selling and not enough retail outlets to meet the demand of small vehicles. The Yaris and Corolla sales should have surged in 2008-2009.
7. Toyota will boost output by 65% of the 1.6 liter vehicle.
What caused Toyota to lose contact with the Chinese market and not have the appropriate number of small vehicles and outlets to match customer demand?
What is your opinion of Toyota leadership strategy?
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| June 08, 2009 09:18 AM |
I don't think Toyota was ready for the new China market. They didn't have good partnerships in China - which is why they are building new car plants now - and they didn't understand how retail worked in China.
Retail apparently is very similar to the US, and is commission based. As the majority of buyers are first time buyers, I think this has a great influence on how a brand is perceived. If Toyota is out of touch when it comes to sales, they would suffer in their market share.
Another factor might be anti-japanese sentiment. We all know how the Chinese "hate" Japan, because of World War II and the atrocities Japan commited in China. This might have a big influence.
Source(s):
http://www.businessweek.com/globalbiz/content/mar2006/gb20060309_341430.htm
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Japan knows China is an important trade partner. Look at the billions of dollar that have flowed from Japan to China. Japan is investing in China like it did with the US in the early 90s. Toyota should have been aware of the investment change and looked to China for leadership. Perhaps, it was arrogance or pride that prevent them from seeing the opportunity and acting.