Toyota Motor Corp.

Toyota's profits are under great pressure and sales in Japan are down because of a drop in unit shipments and a switch by customers to lower-priced models. The recent increases in the value of the yen have depressed export profits, as well. Prospects for Sales growth in Japan appear small, and the company is losing market share in the United States overall: unit car sales were off 5.8 percent in the first two months of 1994, although light truck sales increased 2.5 percent during the same time. Toyota's primary Japanese rivals posted increases from 17 to 34 percent during the same period, despite the strength of the yen. Japanese manufacturers have agreed not to increase their penetration of the depressed auto market in Europe until the end of the century, further hampering growth potential for the company (Ozaroff, March 18, 1994, p. 112).

Toyota also faces increased competition from American car manufacturers in the American car market. American car manufacturers do not face the problems of currency exchange that Japanese auto makers are currently c

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uyers to the Toyota line. With more products to choose from, consumers are likely to find a choice that fits their requirements. Cons: This is an expensive alternative which requires long-term implementation. Necessary in the automobile business, since manufacturers cannot survive without making changes to their models, it is not a short-term solution to Toyota's immediate problem. Problem: Lagging sales Option: Decrease prices in the United States Pros: Toyota's product offerings have increased in price relative to other products due to currency exchange rates. By decreasing the price at which cars are sold to distributors, the company would bring the prices back in line with what American car buyers are used to paying and increase the perceived value of the car. Cons: Radical changes in pricing policy are not to be undertaken lightly or frequently. While a reduction in price may result in some customers moving to the Toyota line, it is also possible that loyal Toyota consumers will question whether the decrease in price represents a corresponding decrease in quality. Problem: Lagging sales Option: Increase promotional efforts Pros: Advertising can be used to reinforce the quality of Toyota vehicles, their
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Approximate Word count = 2646
Approximate Pages = 11 (250 words per page)

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