Outline of Toyota Motor Corporation South Africa

Outline of Toyota Motor Corporation South Africa

Toyota Motor Corporation South Africa was formed as an independent company in

South Africa in May 1961(Toyota SA, Sustainability Report 2010). Toyota SA is the

largest vehicle manufacturer on the African Continent, and the largest exporter of

vehicles in South Africa. (Toyota SA, Sustainability Report 2010)

Toyota Motor Corporation South Africa became a fully owned subsidiary of Toyota

Motor Corporation in 2008. (Toyota SA, Sustainability Report 2010). The company

employers 7934 employees. Its manufacturing plant is situated in Prospecton which is

15 km outside Durban in Kwazulu Natal. It has a marketing office, & a parts

distribution centre in Johannesburg. The sales and marketing department provides

support to all dealerships in South & Southern Africa. The Durban plant manufactures

the Corolla, Fortuner, Dyna, Hilux & Hino vehicle models. Toyota motor vehicles are

sold and marketed through 184 dealers throughout South Africa and supports a further

22 dealers in Botswana, Lesotho, Namibia and Swaziland. The company is the largest

exporter of built up Toyota vehicles in South Africa, with these vehicles being sold in

80 countries worldwide. (Toyota SA, Sustainability Report 2010)

The Prospecton plant in Durban is fully integrated with Toyota Motor Corporations

production network, which has the latest manufacturing technologies, production and

quality assurance systems.(Toyota SA, Sustainability Report 2010) It is ideally

situated being on the east coast and in close proximity to the Durban harbour, King

Shaka airport and the National freeways.

Toyota SA also supports the development of many businesses. It has more than 50

manufacturers that supply components to the motor assembly plant. These

manufacturers in turn have several secondary individual component suppliers.

Toyota South Africa's vision is to be globally competitive and its plan to achieve this

is through, domestic market leadership, being a reliable supplier of quality products to

the global supply network and a profitable organization that is able to fund future

growth. . (www.toyota.co.za Toyota SA, Sustainability Report 2010).

Shortcomings of Toyota SA & the Market

Since 1980, Toyota has been the market leader in South Africa with its Corolla and

Hilux range. One of the cornerstones of it's success has been the reliability of it's

vehicles.

However from 2007 through to mid 2010, Toyota recorded a significant decrease in

it's passenger market share. From the chart below provided by research group,

Response Group Trendline, it can be seen that Toyota's passenger market share (in

dark purple) decreasing from 23 % in to 2008 to 20% in 2009 and down to 18% in the

first six months of 2010 and most notably, that they are no longer market

leaders.(Carte, 2010)

(Response Group Trendline, 2010)

There are a few factors that may have influenced this decline and will be examined.

In 2009 Toyota Motor Corporation recalled 52546 Corolla, Auris & Verso vehicles

plus 216 Prius vehicles. (www.toyota.co.za Toyota SA, Sustainability Report 2010).

Toyota Motor Corporation South Africa also took precautionary measures to recall

these vehicles as part of a service campaign to correct a potentially faulty accelerator.

These recalls had the potential of damaging Toyota's reputation as reliable and quality

vehicle and goes against their world famous slogan, "Everything keeps going right

Toyota." Toyota attributes the drop in sales in 2008 and 2009 to world financial

crisis. (www.toyota.co.za Toyota SA, Sustainability Report 2010).

According to Toyota's marketing head Andrew Kirby in an interview with

Moneyweb, he denied that Toyota's market decline was due to the vehicle recalls and

ascribed it to heavy competition in a declined market. He also ascribes the loss of

market share due to Toyota's absence from the cheap car (entry level) sub b category

and the ageing of some of Toyota's biggest brands. According to Mr. Kirby, the

average list price of the Toyota passenger car offering was R250 000, which was

significantly more than most rivals (Carte, 2010).

The most notable decline for Toyota has been in the entry level car segments, due the

number of competitors in this segment having increased to compete with the Toyota

Yaris. Some examples are the Ford Fiesta and Ikon, Mazda 2, Hyundai I10, Renault

Sandero, Suzuki Swift and Volkwagen's Polo Vivo.

Toyota's commercial, bakkies and trucks and growing exports has however allowed

them to remain the biggest player in the total vehicle market.( Carte, 2010)

Volkwagen's Polo Vivo, which replaced the Citi