Japanese automaker Toyota has bounced back from safety recalls and natural calamities, selling 4.97 million vehicles globally in the first half of 2012, to reclaim its throne as the world’s biggest automaker by sales from General Motors. But can it sustain the status quo?
Just three and a half years ago this Japanese giant (according to the grandson of the company’s founder) was “grasping for salvation” and stood “on the brink of irrelevance.” From being the world’s most valuable automaker by market capitalisation, and No.1 in terms of vehicle sales, Toyota had reached an inflection where it was ending a year without profits, for the first time in its history of over 70 years. In the year ending March 31, 2009, Toyota-based automaker had reported a net loss of $4.6 billion, and looked as if it was headed for corporate graveyard.
Many believed that Akio Toyoda, President of Toyota Motor Company and grandson of Kiichiro Toyoda, was correct because the problems for this Japanese automaker didn’t end there. Toyota soon had to recall over 14 million units (between 2009 and 2010) for issues surrounding the safety of its vehicles. Then in 2011, the company faced serious supply chain disruptions, thanks to Japan’s devastating earthquake and wrecking floods in Thailand. It was no surprise, then, that by the winters of 2011, Toyota’s stock price had tanked over 70% from its early-2007 peak (from 8,090 Japanese Yen on January 4, 2007 to 2,376 Japanese Yen on November 24, 2011; closing prices of Toyota’s stock at Nikkei), and its arch rival General Motors (GM) had once again surpassed it in terms of sales.
But what is surprising many in the industry is the company’s astonishing return from the ashes. Despite a strong yen (the yen has appreciated by more than 33% against the US dollar since January 2007 and almost 13% since January 2010) and a weak global economy, Toyota has reported the highest quarterly profit (for quarter ending June 2012) in four years - $3.7 billion. And not just profit, it has also bounced back from safety recalls and natural calamities, selling 4.97 million vehicles globally in the first half of 2012, to reclaim its throne as the world’s biggest automaker by sales from GM.
In fact, the Japanese automaker sold about 300,000 more vehicles than GM and about 520,000 units more than what Volkswagen did in the first half of the year – perhaps a lead big enough for GM and Volkswagen to catch Toyota in the second half of 2012. Interestingly, while Toyota’s global sales rose 34% in H1 2012, GM and Volkswagen saw their sales increasing by just 2.9% and 8.9% to 4.67 million and 4.45 million respectively during the period. Sounds good so far, but a stroll down memory lane and one can easily question the sustainability of this crown. Is Toyota’s comeback for real?
It was 2008 when Toyota first overtook GM to become the world’s largest automaker by sales (the Detroit based company held the top slot for more than 70 years before losing it to Toyota in 2008). The US market had collapsed and GM had filed for bankruptcy protection, requesting the US government for a bailout to survive. As they say, one man’s meat is another man’s poison, it was argued that the Japanese automaker too had gained out of GM’s agony.
Just three and a half years ago this Japanese giant (according to the grandson of the company’s founder) was “grasping for salvation” and stood “on the brink of irrelevance.” From being the world’s most valuable automaker by market capitalisation, and No.1 in terms of vehicle sales, Toyota had reached an inflection where it was ending a year without profits, for the first time in its history of over 70 years. In the year ending March 31, 2009, Toyota-based automaker had reported a net loss of $4.6 billion, and looked as if it was headed for corporate graveyard.
Many believed that Akio Toyoda, President of Toyota Motor Company and grandson of Kiichiro Toyoda, was correct because the problems for this Japanese automaker didn’t end there. Toyota soon had to recall over 14 million units (between 2009 and 2010) for issues surrounding the safety of its vehicles. Then in 2011, the company faced serious supply chain disruptions, thanks to Japan’s devastating earthquake and wrecking floods in Thailand. It was no surprise, then, that by the winters of 2011, Toyota’s stock price had tanked over 70% from its early-2007 peak (from 8,090 Japanese Yen on January 4, 2007 to 2,376 Japanese Yen on November 24, 2011; closing prices of Toyota’s stock at Nikkei), and its arch rival General Motors (GM) had once again surpassed it in terms of sales.
But what is surprising many in the industry is the company’s astonishing return from the ashes. Despite a strong yen (the yen has appreciated by more than 33% against the US dollar since January 2007 and almost 13% since January 2010) and a weak global economy, Toyota has reported the highest quarterly profit (for quarter ending June 2012) in four years - $3.7 billion. And not just profit, it has also bounced back from safety recalls and natural calamities, selling 4.97 million vehicles globally in the first half of 2012, to reclaim its throne as the world’s biggest automaker by sales from GM.
In fact, the Japanese automaker sold about 300,000 more vehicles than GM and about 520,000 units more than what Volkswagen did in the first half of the year – perhaps a lead big enough for GM and Volkswagen to catch Toyota in the second half of 2012. Interestingly, while Toyota’s global sales rose 34% in H1 2012, GM and Volkswagen saw their sales increasing by just 2.9% and 8.9% to 4.67 million and 4.45 million respectively during the period. Sounds good so far, but a stroll down memory lane and one can easily question the sustainability of this crown. Is Toyota’s comeback for real?
It was 2008 when Toyota first overtook GM to become the world’s largest automaker by sales (the Detroit based company held the top slot for more than 70 years before losing it to Toyota in 2008). The US market had collapsed and GM had filed for bankruptcy protection, requesting the US government for a bailout to survive. As they say, one man’s meat is another man’s poison, it was argued that the Japanese automaker too had gained out of GM’s agony.
For More IIPM Info, Visit below mentioned IIPM articles
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
| BBA Management Education |
