UK Car Manufacturing Market: Factors Impacting Toyota UK Operations

This document provides an overview of the UK car manufacturing market and analyzes the factors impacting Toyota's operations. It includes a SWOT analysis, PESTLE analysis, and information on segmentation, positioning, and targeting.

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Introduction to Marketing
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Table of Contents
Introduction.....................................................................................3
UK Car Manufacturing Market........................................................3
Factors Impacting Toyota UK Operations......................................5
SWOT Analysis............................................................................................5
PESTLE Analysis.........................................................................................7
Segmentation, Positioning, and Targeting....................................................8
Marketing Mix...............................................................................................9
Marketing Performance and Strategy..........................................10
Conclusion and Recommendations.............................................10
Bibliography..................................................................................11

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Introduction
Globally, the automotive industry is the largest on the basis of capital, annual
turnover, volume, and employees. Several organizations have struggled their way in
obtaining their own provision in the automotive industry. Among them, is Toyota which
tells a story of challenges faced as well as the hurdles overcome to get an Asian
product into the global market. GM and Ford are the leading automotive companies,
with Toyota coming third. Toyota has effectively gone against odds to break the
traditional narrow marketing framework. Despite Toyota being the third car
manufacturer globally, its UK’s market share is not lucrative. Probably, this can be
attributed to the customers’ loyalty to local and international manufacturers. Toyota’s
operation in the United Kingdom is given the name Toyota GB plc. The corporation has
established its production plants in the United Kingdom near Derby. The plant located
near Derby manufacturers approximately 1.4-1.6 and 1.8-liter petrol engines as well as
2.0-liter diesel engines that are designed for vehicles made in Burnaston plant.
Nonetheless, the UK plant also manufactures engine parts that are used to assemble
vehicles at the French and Turkish plants. The plant has manufactured over 2 million
engines since its establishment. The United Kingdom has got a mature car market that
is almost completely dominated by foreign-owned companies. Different car
manufacturers have established their production in the United Kingdom’s market. The
common manufacturer is Ford which leads in terms of market share. However, since the
EU import quotas were lifted in 2000, Japanese manufacturers such as Toyota are
having a gradual increase in their market share. The report provides an overview of the
UK car manufacturing market, using micro and macro tools to analyze the factors that
impact Toyota’s operations, as well as analyzing the company’s marketing performance
and strategy.
UK Car Manufacturing Market
Market characteristics: The United Kingdom’s car market is a market that is
continuously developing. By itself, the small car market is at the pinnacle of this
developing business sector. As a result of the different car models, the UK’s car

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segment is classified into two main segments. Most of the models are found in the
city/mini/supermini segment while others are in the lower medium/small family. Even at
instances where the driving expenses are high as a result of taxation, along with
overcrowded charges and so forth, these two segments’ market share dominates UK’s
car industry (Bailey and De Propris, 2014, pp.382). The supermini segment
demonstrates a vast increment in deals making it the pioneer in the market.
Market potential: As of August 2018, according to SMMT data, the United
Kingdom’s car market obtained an impressive growth rate of 23.1%. The United
Kingdom’s growing range for the hybrid, plug-in hybrid, as well as pure electric cars, has
continually attracted buyers (Kingsnorth, 2019, n.d.). The demand for cars as of 2018
surged by approximately 88.7%, with the car sector accounting for around 8% of the
market, - the highest ever level- as billion dollar manufacturer investment assists in
delivering more ultra-low as well as zero emission models to the European market.
Customer analysis: As a result of new technology, the superminis have thrived,
enabling the manufacturers to incorporate features that were in the past reserved for the
larger, luxury market, while maintaining maneuverability and fuel efficiency benefits.
Currently, the customers may trade in as their income increases (Bakker, van Lente and
Meeus, 2012, pp.879). Additionally, they are also likely to upgrade to other smaller
vehicles that have got better features. The UK has and is still experiencing growth in the
number of drivers, which in effect has led to an increased number of car registrations.
Competitors: In the UK car manufacturing market, there are many competitors.
Among these competitors include; BMW, Audi, Nissan, Toyota, Honda, Ford, Peugeot,
Mercedes Benz, Vauxhall, Land Rover, Mazda, and Fiat among others.
Distribution analysis: Franchised dealership is the primary distribution channel
applicable for small new cars. At the moment, most of these franchises are usually
exclusively dedicated to selling the items of a specific car maker. There has been a
decline in leadership numbers has a result of the steady decrease in the number of
franchised outlets used by the car manufacturers (Dvir and Strasser, 2018, pp.142).
There is a steady increase in the number of car dealers, trade via the internet, along

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with direct imports from Asia, Europe, and America. With the aim of fostering customer
loyalty, the manufacturers boost their finance agreements through their dealer outlets as
well as websites (Jones and Sufrin, 2016, n.d.). The increased competition in the United
Kingdom’s car market has forced dealerships to close some of their outlets with the
focus of reducing operational costs and at the same time endeavoring to retain their
volume sales as well as market share (Hassan, and Craft, 2012, pp.347). Most of these
car manufacturers have developed websites that offer list prices, online brochure-
ordering service, along with specifications, meaning that the customers are also offered
the opportunity to purchase their cars directly from the manufacturer.
Factors Impacting Toyota UK Operations
SWOT Analysis
Strengths
Toyota enjoys certain benefits that are associated with its strengths. The
organization has got a reliable, high-quality image Research and Development, and
compared to the other car manufacturers, it is the most used. Nonetheless, Toyota is
innovative and other factors such as the just in time production, total quality
management, Lexus, including its other strong brands make it very competitive in the
UK’s automotive industry (Narla, 2013, pp.25). The organization also has a very big
financial capability that is referred to as Toyota bank including strong distribution
networks that assist it to improve its market position as well as sales globally (Green
Car Congress, 2019). Toyota also innovates high fuel-efficient engines and hybrid cars
that specifically meet UK’s standards of reducing air pollution and CO2 emissions, thus
enabling it to gain competitive advantage. The other strong factor associated with
Toyota is the cooperation it has with European car manufacturers such as Citroen and
Peugeot to manufacture the car Aygo that is specifically tailored for the UK market.
Weaknesses
Toyota is a big corporation and it has its own weaknesses. Currently, car
manufacturers are manufacturing a high number of vehicles. As such, Toyota is entitled

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to make sure that the customer is interested in buying its cars. Japan and the United
States are Toyota’s main markets. As such, the organization is constantly affected by
economic changes along with the unstable political scenarios such as UK’s Brexit move.
The company’s profit margins are affected by major or minor changes in the currency
exchange rates (Dhingra, Ottaviano, Sampson and Van Reenen, J., 2016, pp.2). To
make sure that it maintains its operational efficiency and strategic advantage, Toyota is
forced to manufacture a high number of cars. Manufacturing the high number of
vehicles forces Toyota to spend more investment in shaping its factories, acquire raw
materials, labor, including other costs.
Opportunities
In the current marketing environment, the main environmental issues include
climate change along with air pollution. Hence, customers are aiming to obtain products
that focus on saving the environment. This is the best opportunity that Toyota UK has
got to implement green vehicles that use alternative resources that may include hybrid
engines or even electricity to reduce carbon dioxide emission. By doing this, Toyota will
have met the needs of the customers and showed the world and the UK market
specifically that it is socially responsible (Gilligan and Hird, 2012, n.d.). The other best
opportunity that Toyota has is to match its mini cars segments in such a manner that
they meet the consumers’ needs by enhancing its measures of saving the environment
and the economy (Sarkar, 2012, pp.42). Toyota UK must thus innovate cars specially
designed for this segmentation due to the economic uncertainties in Europe and
increasing fuel prices.
Threats
Due to globalization, there has been increased global competition in the
automotive industry. The competition possesses the potential to reduce sales, which in
turn would affect Toyota’s financial condition. Competition is the main threat that Toyota
is faced with in the crowded United Kingdom’s automotive industry. Korean Motor is the
other automotive organization that has opened its plant in the UK thus posing foreigner
competition to Toyota (Hoque, Faruque and Mahbub, 2013, pp.227). As a result, this

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calls for Toyota to enter into joint ventures with the local manufacturers such as
Peugeot and Citroen. Emission Restriction is the other threat that Toyota is faced with.
There are chances that these restrictions will be tightened or new European emission
standards may be imposed, thus increasing the costs associated with testing products
including manufacturing costs. Economic recession is another threat that likely impacts
Toyota’s production because it affects the pricing of steel and other raw materials.
PESTLE Analysis
Political
Political factors are essential to multinational companies such as Toyota because
it offers guidance in understanding specific requirements, restrictions, regulations,
security measures, and policies related to the UK. Political factors adversely determine
business regulations and the amount to spend by the consumer. All cars produced are
supposed to adhere to European vehicle emission standards as well as regulations, -
Euro Standards (Harvard Business Review, 2019). UK government seems to support
Hybrid and small vehicles that do not emit a lot of CO2. Hence, these cars are friendly
to the environment. However, it is likely that cars with high CO2 emission will attract
heavy TAX charges. UK’s automotive industry has strong regulations that seek to
ensure that high mileage cars are manufactured while enhancing the manufacture and
sale of the automobile.
Economic
Consumers target cars that have smaller engines due to their fuel-saving
efficiency. There has been an increase in car prices due to inflation. Depending on oil is
the main factor that affects price elasticity. As such, customers are seeking to buy cars
that save them money by providing them with bigger mileage. Depending on foreign oil
reserves and gas is likely to impact on the UK’s economic growth, - GDP and national
security. Globally, there have been fluctuations in the GDP, and the UK is no exception.
However, according to the IMF 2009, a projection of the global GDP predicts that
between 2011 and 2025, the GDP will steadily increase by 3.5% (Wu, Inderbitzin and
Bening, 2015, pp.198).

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Social
Toyota’s main challenge is the difference that exists between Japanese and
European customers. Unlike in Japan where life is about working, the UK’s cultural life
involves both working as well as social private life. Aimed at satisfying the social life of
the UK’s population, the organization has manufactured cars targeting the UK’s green
and small car segment (Baker, 2014, n.d.). Toyota does this to ensure that the world
remains a clean environment, including saving natural resources through the provision
of acceptable social costs.
Technological
With the shift of the customers towards environmental-friendly vehicles,
technology within the car manufacturing industry has shifted towards this (Rahmani,
Emamisaleh and Yadegari, 2015, pp.106). Toyota’s main technology strategies are to
reduce carbon emissions and innovate alternative fuel such as Hybrid engines and
electricity.
Environmental
With regard to the UK’s marketing, there has been a concern for conserving the
environment. Toyota UK has reacted to change in customer preference by focusing on
hybrid cars, fuel-efficient cars, along with dual fuel engines.
Legal
The EU dictates how end-of-life cars (ELV) are supposed to be recycled. There
are legal measures to make sure that car manufacturers take back components such as
shredder residue, fluorocarbon, including airbags.
Segmentation, Positioning, and Targeting
Segmentation: As a leading car manufacturer, Toyota UK uses a segmentation
whereby it focuses on middle high-income customers as demonstrated by its actions to
roll out Prado Land Cruiser and Camry (Kapferer and Bastien, 2012, n.d.). In addition,

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the company also focuses on the high-income earners whereby demonstrated by the
manufacture of Toyota Altis Sport Model and Toyota Fortune.
Positioning: Toyota UK tries to ensure that its positioning is different from its
competitors. In a high-tech automotive market that focuses on innovating new products,
Toyota UK’s positioning strategy is based on three key positioning aspects that include
competitor target, customer target, as well as the value proposition.
Targeting: Since Toyota UK does not focus on conveying a similar message to all
its clients, it does not use undifferentiated strategy. Rather, the company makes use of
a differentiated or concentrated targeting. Using this strategy, Toyota targets every
segment using its marketing mix.
Marketing Mix
Product: Toyota has launched several products in the UK’s market. The products
include Toyota Aygo, Corolla, RAV4, Land Cruiser, Lexus, Yaris, Avensis, Prius, and
Auris. Toyota was aware that gas-guzzlers would be uncommon in the future and
accepted the challenge to innovate and develop hybrid cars such as the legendary
Prius.
Price: The strong UK economy results in a comparatively high buying capacity.
Toyota UK thus prices its products based on the population’s different income levels.
However, the company tries to ensure that it gives its customers more for less price.
Promotion: Toyota’s initial marketing strategy for the Prius model targeted early
adopters of new technology. The organization launched its promotional activity that
highlighted Toyota’s commitment to manufacturing environmental friendly cars (Lei and
Moon, 2015, pp.85). With the support of the UK’s government, Prius was exempted
from paying congestion charges in London.
Place: Bio-psycho-socio-economic determinants are essential in determining the
buying behavior. Previously, Toyota was not aware of the success of the UK market.
Analyzing the UK’s taste regarding vehicles, the company launched Prius which is now
a success.

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Marketing Performance and Strategy
Toyota is continuously investing to create flagship stores aimed at maximizing
customer experience. The company’s success is based on its strong sense of identity
which is associated with the experience customers obtain from using their vehicles.
Toyota UK has developed its brand image as the leading manufacturer of state of the
art and environmentally friendly vehicles not only in the UK but globally (Sec.gov, 2019).
Toyota’s marketing strategy differs depending on the market requirements of a certain
geographic location. Toyota UK applies a differentiated marketing strategy because it
focuses on differentiating its products from rival products. Rival organizations such as
Ford are trying to use similar global marketing strategy to increase its market share
while Toyota uses a specific marketing strategy for every market. The differentiated has
allowed Toyota to price its products as it wishes because its products are dissimilar
from those of rival companies (Thierer and Hagemann, 2015, pp.339). The strategy has
enhanced Toyota’s performance by enhancing its market share in the UK’s market and
it has ensured that the products meet the needs of the consumers.
Conclusion and Recommendations
Summing it up, Toyota UK’s organizational orientation, as well as its marketing
strategy, is tailored following the company’s organizational culture. Toyota’s focus has
always been to offer customers the best quality and putting customers first. Signs of
Toyota UK’s best customer service are expressed in its marketing strategy, product
development, after sales service among other activities. With the success of its Lexus
brand, Toyota needs not to worry about having a distinctive brand image. Rather it
should focus on quality control. By introducing hybrid technology, Toyota has been in a
position to extract increased returns. What Toyota now needs to do is to capitalize on
their investment. Achieving this, Toyota UK has to do the following, make sure that the
Hybrid cars are available to as many clients as possible and balance between low
pricing and price skimming.

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