Toyota, the largest auto manufacturing company in the world, sells vehicles in 170 countries and regions, has 54 manufacturing companies in 28 countries and regions outside of Japan, and has R&D facilities worldwide. In Europe, Toyota has manufacturing facilities in six countries, including France where the Yaris is manufactured. It also has R&D facilities in Belgium, the U.K., Germany, and France. So why has it taken Toyota so long to crack into the competitive European market, and why are European companies only now beginning to feel the pressure from Asian manufacturers? Many analysts have pointed to an agreement between the Japanese government and the European Community (predecessor to the European Union) in which the two negotiated a quota each year for the number of Japanese cars imported into Europe. When the quota system and other restrictions were lifted in 1999, Toyota responded by establishing a European Design and Development center in southern France and capturing distinct cost advantages by setting up additional production centers in East Europe. Toyota’s European market share and profitability began to grow steadily. Riding on its success in Europe in the mid-2000s and its growth internationally, Toyota had ambitious goals for the future. However, the global financial crisis and the ongoing difficulties posed by international recalls of more than 9.5 million vehicles have put a crimp in those plans. In addition, the 2011 earthquake and tsunami in Japan severely disrupted Toyota’s supply chain. By 2015, Toyota had only 4.2 percent of the European market, well behind market leader VW with 24.9 percent.

Questions

1. Why did the Europeans try to protect their auto industry from Japanese imports, and do you think this was fair to European consumers?

2. What has Toyota done to be more successful in Europe, and why do you think it hasn’t been more successful? What else can it do?