Toyotas Strategy And Initiatives In Europe

The mini-car segment of the European automobile industry is tough with a large number of powerful players competing for market share with a relatively similar product.   The A-segment has been in existence for many years and has blossomed in recent times due to economic pressures such as high unemployment, rising fuel prices and general economic uncertainty.   These factors have opened up the opportunity for potentially large gains in the A-segment.   This fact has not gone unnoticed by the big global car companies, many of whom have entered the market with varying degrees of success.   The level of threat which the competition poses to Toyota in its quest for market domination can be revealed by conducting a five-force analysis.

Rivalry among Competing Sellers

Toyota Motor Europe has just entered the segment and is one of thirteen competitors vying for market share.   All other competitors, with the exception of Kia, have at least five years experience in the market and are now very familiar with each others strengths and weaknesses.   The large selection of alternatives heightens rivalry among sellers.   The industry is pretty much built around one standardized product, the mini-car, with the success of each manufacturer dependant on its ability to create a distinction which is favourable to the consumer both in performance and value.   High fixed costs and low margins dictates that the offensive strategies used to create these distinctions must be successful as failure can result in enormous loss as was in the case of MCC smart and VW’s Audi A2 and Lupo models.

Due to the high emphasis on keeping costs down and the low margins obtained from sales, price wars are not an option and any reduction in price must come as a result of a successful cost reduction strategy.   Only the BMW Mini and Fiat Panda have managed a constant year-on-year growth over the past five years which has highlighted the importance of choosing the correct weapons at the correct time and also...