Toyota in Europe

In my Tech Talk series on Good Books, I am discussing “The Toyota Way.” The latest issue of Business Week discusses Toyota’s European plans, where its “stylish models and an innovative, superefficient factory have Renault, Fiat, and other locals worried”:

Toyota, long a marginal player in Europe, is becoming a fearsome market force as it applies itself to winning a bigger share of the Old World’s roadways. Sales in Europe rose 20.6% in the first four months of this year, following a 10.4% leap in 2003, to 835,000 cars — a dramatic performance given that the European market shrank by 1.3% last year. Those gains, fueled partly by the redesigned Yaris, pushed Toyota’s market share in Western Europe to 5.3% in April, up from 4.5% a year ago, overtaking Mercedes and Audi and edging close to Italy’s Fiat. “Every point Toyota gains is hurting the others badly,” says Peter Soliman, partner at Booz Allen Hamilton’s Dsseldorf office.

Toyota is determined to snare even bigger gains in Europe. Its goal is to up its market share there to 8% by 2010. The world’s No. 2 auto maker spent the 1990s slowly acquiring a hefty 11% chunk of the $457 billion U.S. auto market. Industry experts say the Japanese giant has a good shot at becoming one of the leading auto brands in Europe and could well exceed its 8% target. “They are producing cars Europeans really want,” says Garel Rhys, professor of automotive economics at the Cardiff Business School in Wales. “Toyota will become a major competitive threat in Europe now.”

European auto makers have more to fear from Toyota than a handful of hot models. While the Japanese powerhouse was figuring out how to build cars attractive to Europeans, it was also bearing down on costs to wield the efficiency needed to prevail in one of the world’s lowest-margin auto markets. Toyota’s management asked engineers to propose an innovative, cost-saving design for the Valenciennes facility. The result, a compact, star-shaped factory, was a first at Toyota. It features a production area with limited space to store parts or components. The 2 1/2 hours’ worth of inventory on hand is lower than at any other Toyota factory in the world.

Toyota seems to be becoming the Dell of the auto industry.

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.