Swot analysis of Toyota Motors Corporations. Toyota Motor Corporation is a Japanese automotive manufacturing multinational company. Kiichiro Toyota was the founder of the Toyota Corporations and he laid the foundation of the company on August 28, 1937. The headquarter of the brand is in Toyota City, Japan.
Toyota is the world’s largest manufacturer of automobiles after Volkswagen. It’s the world’s 10th largest company in terms of revenue. The automotive company has employed more than 364,445 employees to manage its various operations across the world. The company is also the global market leader in electric hybrid vehicles.
According to an estimate, the annual revenue of Toyota in 2020 was 241.196 billion dollars and it has decreased by 13.59%. Out of which, the net income of the automotive company was 13.280 billion dollars and it has decreased by 23.47%.
Toyota Group sells its vehicles under the following brand names; Daihatsu, Hino, Ranz, Lexus, Gazoo Racing, TRD, Scion, and Toyota. The automotive brand has a stake in various worlds like; 2.8% in Panasonic, 3.8% in Yamaha Motors Corporations, 4.8% in Suzuki, 5.1% in Mazda, 5.9% in Isuzu, and 20.02% in Subaru Corporation.
Today, we’ll discuss the swot analysis of Toyota. It would help us analyze the internal and external factors of the world’s largest automotive manufacturing company. For external factors, check out the pestle analysis of Toyota. Here’s the swot analysis of Toyota as follows;
Strengths of Toyota
According to the ranking of Interbrand, Toyota is the 7th most valuable brand in the world in 2020. The market worth of the automotive company is 51,595 million dollars. Approximately 8% of its market growth has declined due to the pandemic of covid-19. The brand is operating its business in roundabout 200 countries across the world.
Research & Development
Toyota ranks at the top of investing the highest resources in the research and development worldwide in the automotive industry. According to an estimate, the R & D budget of Toyota in 2020 was 1.1 trillion Japanese yen.
Toyota has partnered up with Stanford University, MIT, and the University of Michigan for a common goal of research and development on autonomous technology and robotics. It shows the company’s commitment to technology and engineering.
High Stock Value
Toyota is a listed company in 3 major world stock exchange markets; Tokyo Stock Exchange, New York Stock Exchange, and London Stock Exchange. The pandemic of covid-19 has had a severe impact on the automotive stock of different companies. The stock of General Motors has dropped by 64%. On the other hand, Toyota’s stock has decreased by 15%.
Hybrid & Sustainable
Toyota is fully committed to the development of hybrid vehicles and clean-energy sustainable vehicles. The company has introduced some of the best hybrid vehicles in the market. The brand’s green cars are a great alternative for eco-friendly customers.
Toyota is launching the new solid-state battery-equipped electric vehicles. It has the capacity to cover a distance of 500 km in a single charge. It would take 10 minutes to refill the charging from 0 to 100%. Such new features have attracted the attention of many electric automotive users.
As we know that the environment wants a zero-carbon emission mode of transportation. Toyota wants to achieve this goal by electric vehicles and hydrogen fuel cells. The company has ownership of more than 5680 patents of hydrogen fuel cells worldwide. It gives the company a strong competitive edge.
Toyota follows the simple rule of continuous development and it has made the company a globally recognized brand. The brand is doing it through innovation and productivity.
Toyota has a very advanced supply chain and distribution network across the world. The company’s suppliers manufacture different parts of the vehicle in different countries and work in collaboration. The brand has a strong network of more than 167 distributors in 8 major regions; the Middle East, Africa, China, Asia, Europe, North America, and Latin America. The dealers and distributors make the brands’ vehicles easily available to customers.
Toyota has a diverse and large product portfolio and the company manufactures a variety of vehicles to target different types of market. Busses, Station wagons, trucks, hatchbacks, minivans, sports vehicles, sedan vehicles, and SUVs are some of the major products of the company. Toyota also offers sports cruisers, boats, and premium vehicles like Lexus.
Toyota is a globally recognized brand and the company has won many awards for manufacturing operations, safety, environmentally friendly, and design. 2020 NHTSA has won the 5 stars safety awards, 2019 IIHS has won the top and well equipped LED headlights award, and 2019 Car has won the Drivers’ choice award.
Weaknesses of Toyota
Gap in Technology
It’s good that Toyota is launching hybrid and electric vehicles and planning to be more efficient in the future. But the competitive brands like Tesla and BMW have already excelled in those areas. Toyota is just keeping up with the modern technology.
Imbalanced Global Presence
Toyota is very successful and selling more vehicles in Japan, Europe, and the US market. But we don’t see the same level of presence in the Middle East, Africa, and Latin America. It means that the company’s sales are depending on some regions. The company should focus on achieving the same market share everywhere.
One of the reasons behind the technological gap and the lack of innovation and creativity is that the management system of Toyota is very rigid and strict. The communication only works from top to bottom without giving any feedback from bottom to up. It has helped the company to attain some level of control over the company.
Labor Issues & Strike
Some of Toyota’s workers employed at the Indian manufacturing units strike against the company for poor working conditions. The brand wants to achieve the target of high productivity and quality control. Such strikes and protests won’t allow the company to meet the demand of the market.
Toyota has recently recalled approximately more than 700,000 of its vehicles for having the damaged fuel pump. The company also claims to be flawless and better in terms of product, technology, and design. Such issues aren’t good for the image of the company’s reputation.
Opportunities available to Toyota
Customers’ data is very important for the automotive companies to launch new projects like autonomous vehicles, predicting the maintenance time, and use-based insurance. Toyota has the advantage of one of the largest manufacturers and sellers in the automotive industry. The company has access to a lot of customers’ data.
Al & Cloud Computing
AI (artificial intelligence) and cloud computing technology is the future. That’s why many tech companies like Huawei, Samsung, Google, Amazon, Facebook, Microsoft, and Apple are investing their resource in such technology.
Toyota is also greatly invested in it. The brand is spending approximately 70 billion dollars by end of 2022 and the company’s growth rate is 19.88% in cloud computing technology.
Nanotechnology has a lot of features and applications in many ways. Like safety, cooler, quiet, more durable, and lighter vehicles. The AI venture of Toyota has led the company to invest in the Atlanta based nanotech developer, Carbice. It would help the company to resolve the impact of temperature on the electronics of the vehicle. The brand should invest more in such projects.
Self Driving Vehicles
Toyota is also working on self-driving technology. It makes transport more convenient and leisure. The purpose of the company is to make the transport safe. But the company is uncertain that how the customer market would react to it.
Sky driving isn’t fiction anymore. SkyDrive, a Japanese startup has successfully manufactured and tested the first man-made flying car. Toyota is financing the research of the startup. When we talk about commercializing flying vehicles, then the company has to pass through many legal hurdles. The management of the automotive company is optimistic that it would pay off well.
Emerging Asian Market
Asian markets like India and China are the world’s biggest vehicle markets. Toyota should shift its focus in those emerging markets and balance the worldwide market share. The brand could capitalize on a lot of new opportunities by entering those markets.
Threats Toyota has to face
Tesla, Ford, Volkswagen, and BMW are some of the major competitors of Toyota. Their market share is increasing in the automotive industry. Their customer market growth poses a great threat to the company.
The worldwide pandemic of covid-19 has decreased the company’s revenue and net income to a great extent. It has decreased the purchasing power of people by increasing the unemployment rate.
Tesla is the major competitor of Toyota in the electric automotive industry. It is also a more trusted and valuable brand than Toyota. Toyota may be the largest manufacturer, but Tesla has its strength and gives tough competition to the brand.
The manufacturing costs including material cost, labor cost, and others are increasing. They increase the overall retail price of the vehicle and that hurts Toyota’s profitability.
After a careful study of the swot analysis of Toyota, we have realized that Toyota is indeed the world’s leading automotive multinational brand. Economic recession, growing competition, and increasing costs are serious threats to the company. Toyota should capitalize the AI, cloud computing, and nanotechnology by using its reputation and resources.
Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. Other than that, he’s a fun loving person.