Toyota SWOT Analysis (2024)

Did you know? Toyota was first founded in 1933 as an automated loom business. Founded from humble beginnings, Toyota grew gradually into a multinational automotive company and one of the world’s most profitable and valuable companies.

With a presence in over 170 countries, Toyota is a force to reckon with. We can learn a lot by assessing Toyota’s strengths, weaknesses, opportunities, and threats. 

Toyota’s Strengths

1. Global Dominance

Companies that dominate the market have leverage over competitors. From Asia to Europe, Africa, and America, Toyota cars are sold in over 170 countries in different regions and 10.5% of the global market.

2. Diversified Variety

Toyota offers a wide variety of vehicles, from Corolla to Prius, Camry, Land Cruiser, Scion, Hilux, Supra, and many more.

The cars are of different models, including sedans, pickup trucks, and off-road vehicles. They are powered by electric, hybrid, petrol, or diesel, allowing the company to cater to consumers across the entire auto market.

3. Effective Leadership

Toyota’s strong leadership and organizational structure have enabled the company to avoid friction and turmoil witnessed in other auto companies like Nissan.

Leadership and structure have enhanced the stability of the company.

4. Strong Brand

Having strong brand recognition and awareness enhances the value of the brand and  contributes to the bottom line with higher sales.

Toyota is regarded as one of the most recognized brands globally and, according to reports, has continued to be the world’s most valuable car brand, with a brand value of $75.5 billion.

5. Technological Leadership

Apart from its title as one of the biggest automakers in the world, Toyota is an innovator, disruptor, and leader in technology.

From hybrid Prius to RAV4 and Corolla, Toyota has manufactured and sold over 20 million hybrids since 1997, with some competitors relying on its cutting-edge hybrid technology.

6. Extensive Supply Chain

Toyota has built an extensive and one of the best global supply chains in the industry.

From manufacturing factories to assembly plants, outlets, branches, and auto parts vendors, the company’s global supply enables resilience and minimizes market-based risk.

7. High Production Capability

With higher production capacity comes stability and flexibility in sales leading to higher profits. Toyota is giving serious competition to the competitors with its high production capacity of almost 10 million cars per year.

8. Strong Financial Position

Toyota has extra cash saved away compared to its competitors, offering it flexibility and long-term stability. In 2022, Toyota’s Issuer Default Ratings (IDR) rating by Fitch Ratings International was A+.

Toyota’s Weaknesses

1. Overdependence on Suppliers

To succeed, global auto manufacturers must rely on suppliers of cheaper raw materials like aluminum worldwide.

Toyota’s overdependence on suppliers exposes the company to a wide range of risks, including a shutdown of production in case suppliers declare a strike or fail to deliver vital materials in time.

2. Poor Marketing of Eco-friendly Cars

Although Toyota manufactures eco-friendly vehicles using advanced green vehicle technology, the company has failed to advertise and grab meaningful market share for these highly demanded technologies.

3. Manufacturing Defects

A high vehicle recall rate can immensely destroy an automaker’s reputation, forcing customers to mass-migrate to its competitors.

Toyota has a high recall rate and recalled about 3.9 million vehicles in 2020 due to fuel pump defects that can lead to stalling.

4. Ineffective Marketing

Apart from Toyota and Lexus cars, the company also owns Hino and Daihatsu car brands that are unrecognized by consumers due to Toyota’s ineffective marketing strategies.

Toyota’s Opportunities

1. Focus on Emerging Economies

The financial situation in developing countries has improved immensely over the past few decades.

Toyota can increase investment in emerging economies like China and take advantage of the ever-increasing demand for cars by the growing middle class.

2. Expand into Autonomous Vehicles

The demand for safe but cheaper self-driving vehicles is increasing astoundingly. Toyota can expand into this growing market and exploit readily available opportunities.  

3. Expand into Medical Device Sector

The coronavirus pandemic has highlighted the importance of automakers engaging in other unrelated industries.

Toyota contributed to global efforts to combat COVID-19 by switching its factories to manufacture medical face shields. The company can expand further by manufacturing other medical devices, such as ventilators. 

4. Increase Focus on Eco-friendly Vehicles

The number of eco-conscious consumers has increased over the past few years.

Toyota can exploit this opportunity by increasing its investment in and focusing on manufacturing eco-friendly vehicles, such as hybrid and electric cars. Toyota has set an internal goal to sell about 5.5 million electric vehicles by 2030.

5. Invest in Related Fields

Toyota has the expertise and resources to engage in other fields within the auto industry like motorcycle production or related to the industry, such as ridesharing apps and multi-modal mobility services.

Toyota’s Threats

1. Global Pandemic

Automotive is a capital-intensive industry that cannot operate effectively without stockpiles of parts and raw materials.

The coronavirus pandemic has revealed that Toyota and other automakers are highly vulnerable in case of worse global pandemics in the future.

2. Cut-throat Competition

Toyota faces increased global competition from ridesharing apps and traditional competitors like Nissan, Ford, Volkswagen, BMW, Mitsubishi, Hyundai, and many new entrants.

With increased competition comes slower growth in profitability and market share.

3. Negative Publicity

Consumers are constantly exposed to images of terror groups, rebels, and armies of rogue regimes riding Toyota’s off-road trucks.

Although it is a testament to effectiveness in all terrains, the association with terror, bloodshed, and war zones can affect sales. Also, car names like Toyota ISIS and Corona do not help.

4. Global Economic Turmoil

From the global recession due to the pandemic to Trump’s tariffs and isolationism, partaking in the global arena profitably will increasingly become a challenge for Toyota if these threats persist.

5. Technology Race

With the race to deliver electric and autonomous vehicles, auto manufacturers, including Toyota, are pushed to invest billions in partnerships and upcoming technologies to keep up with competitors.

Over-investing can undermine stability and even lead to bankruptcy. 

6. Scarce and Expensive Raw Materials

For centuries, global consumption has diminished resources worldwide, leading to an increase in the prices of inputs.

Toyota’s operations, profitability, and sustainability can be negatively affected if the trend continues.

 References & more information

• Featured Image by Joshua Yu

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