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Case Study

Toyota's strategy and initiatives in Europe: The launch of the Aygo

By Kazuo Ichijo and George Rädler

24 pages

June 2006

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Reference: IMD-3-1673

Toyota is one the most successful car companies in the world. The company set the ambitious growth goal of a 15% share of the global markets by 2010 (up from 11% in 2005). For this, the European market is becoming of strategic importance. The case outlines Toyota’s global strategy before focusing on the European market in particular. Sales in Europe increased by over 50% between 2000 and 2005. In the process, Toyota’s European manufacturing capacities more than tripled to over 600,000 units over the same period.

Although Toyota was on the growth path, the launch of the Aygo posed many challenges. The segment was very price-sensitive and production cost had to be tightly controlled. Toyota decided to enter a joint venture with PSA, the maker of Peugeot/ Citroën. The case shows how cost reduction was the overriding principle and explains how both companies worked together. But selling a car with 93% parts commonality also posed many challenges on the marketing side: Toyota wanted to target younger customers in order to lower the average age of customers. Toyota had no experience in this segment and hence had to go new ways. The case takes readers through the various steps Toyota took in order to promote the Aygo.

Learning Objective

Toyota is a latecomer to the European minicar segment. The case analyzes how Toyota changed the business system in order to deal with the various intricacies of this segment. On the manufacturing side, Toyota entered a joint venture with Peugeot/Citroën and built a new plant in the Czech Republic. The cars rolling off this assembly line had a parts commonality of 93%. But the innovations did not stop at the factory gate. Toyota invested in a massive Internet presence, meeting potential customers at locations of their preference and sponsorship of concerts etc. The case is a good platform for discussing Toyota’s changes to the existing business system, both upstream and downstream.

Keywords

Joint Venture, Viral Marketing, Generation Y, Automotive

Settings

Europe
Toyota
2000-2005

Type

Field Research

Available Languages

English

Related material

Teaching note, Video

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