Toyota Hybrid Car Industry

This article explores the Toyota hybrid car industry, including the concept of hybrid cars, market size and structure, key issues faced, and future growth. It discusses the competitive players in the industry and the impact of Porter's five forces. The article also highlights the importance of technological advancements and effective marketing strategies in improving the competitive position of Toyota Group.

TOYOTA HYBRID CAR INDUSTRY

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
Main body...................................................................................................................................1
Market size and structure............................................................................................................5
Key issues faced and future growth............................................................................................6
Aspect of improving competitive position..................................................................................6
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Hybrid and electric cars are major concept that has been taken in consideration by many
automobile companies. The hybrid car sector helps in proper rise while placing a company in
technological and automobile market in an effective way. They are however a new concept that
is covered by only few car manufacturing firms. It requires extensive research and usage of
effective market research and technology that will help in development of these cars (Thomas,
2015.)
Toyota Group is one of the leading Japan based car-manufacturing firms that require to
have a good market share, effective market research, major competitive players, driving forces
etc will be discussed here. Other than this, the nature of market sector it operates in, structures
and key issues related to hybrid car manufacturing are required to be considered.
MAIN BODY
Concept of hybrid cars
The concept of hybrid cars and electric vehicles is comparatively new in automobile
market sector. These are highly developed and technological vehicles that operate on both fossil
fuel and electricity with equal ease. However, these vehicles are at present in starting phase and
require extensive research and development.
The hybrid and electric car is a conceptual automobile that runs on both fuel and
electricity. They are known as conventional vehicles and are intended to have good fuel
economy. These are well known for their high performance and reliability. This concept is
gradually gaining popularity due to high fossil fuel and crude oil prices and pollution level over
the globe. Thus, many major automobile companies are been entering within this industry.
There is a difference between a hybrid and an electric car. A hybrid car can use both
fossil fuels with internal combustion engine (ICE) along with electric propulsion system (EPS).
On the other hand, electric cars run solely on electricity, hence known as 'charged vehicles'.
Although with effective research, many companies are able to develop hybrid electric vehicles
(cars and pickups) that store kinetic energy of a vehicle that can convert into electric energy and
save it for later use.
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Business sector
The electric automobile business sector is one of the fastest emerging markets that have
high potential and chances of growth. High cost of petrol, diesel and other carbon-based fuels
increase in pollution and rise in environmental concerns that have been major driving factor to
increase popularity of organisation.
As chances of growth are relatively high and very few competitors are operating within
the market, Toyota can easily enter and operate within this business sector. Electric and hybrid
car manufacturing industry requires extensive market research and use of latest technology. The
lack of fierce competition helps in increasing development and implementation of various
technologies and innovation that are taken in consideration by any business organisation.
Competitive players and forces
Some major firms like Tesla Motors, Honda Motor Co, Ford Motors are operating within
this industrial sector and can prove as major competitors to Toyota Group. Thus, the cited firm
is required to effectively manage these competitors’ to be one of the market leaders (Cherubini,
Iasevoli and Michelini, 2015).
At present, Toyota Group holds a sustainable and integral position in hybrid cars
manufacturing sector. This improves its market volume and share and leads to have a good and
significant scope of development. In the field of electric cars, the firm is required to have a good
market assessment and technological development that helps in improving the market position.
Other than this, the electric car manufacturing market is not much penetrated and thus, will help
in suitable management of business operations and activities.
There will be many competitive forces that will impact the performance and development
of hybrid cars and vehicles by Toyota Group. Thus, in order to effectively analyse these factors,
Porter's five-force model has been implemented in implementing proper and strategic efforts to
improve their performance. Major competitive forces that impact the performance of cited
automobile firm are:
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 Competitive rivalry: It is a strong force that impacts company's performance. Toyota
Group will face major competition while handling business operations and actions that
helps in superficial support to increase the overall performance. As hybrid and electric
cars manufacturing sector is one of the fastest growing industries, many companies are
applying effective efforts to penetrate this market (Penna and Geels, 2015.).
This has created a stiff and fierce competition for the cited automobile
manufacturing entity. Other firms like Tesla motors have already launched a successful
prototype of electric and hybrid cars that has caused Toyota group to speed up its market
research and implementation of latest and advanced technologies to manufacture efficient
automobiles (Montazeri-Gh and Mahmoodi-k, 2015.).
 Bargaining power of Buyers: Hybrid and electric cars tends to be quite expensive as
compared to normal automobiles. Thus, firm must conduct effective negotiation and face
bargaining from their buyers or customers. Low switching cost, high quality of product
and availability of proper substitution are helping factors for this organisation but
variations in pricing and features might cause losing of its loyal customer base. The
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Illustration 1: Porter's five-force model
(Source: Porter 5 force model, 2015)

consumer turns around will impact overall functionality and business revenue generation.
Other than this, the firm needs to acquire effective information about customers’ needs
and perception towards hybrid and electric vehicles to help in developing a good quality
product and service for better customer satisfaction level (Matsuo and et.al., 2016).
 Bargaining power of suppliers: Suppliers are one of the major parts of cited firm's
stakeholders and support in effective execution of its business operations and functions.
The firm must effectively manage the needs and demands of their suppliers as they will
play a very crucial and significant role in setting up and executing of the business
operations of an organisation. As they provide essential raw materials to carry out
operations, a proper and appropriate share of profit margin has to be shared with them.
This approach will support to manage their suppliers in an effective way. The bargaining
and negotiation increases when suppliers are fewer. In order to mitigate any sort of risk
related to it, Toyota group must have a sufficient number of raw material suppliers.
 Threat of substitution: The chances of substitution are very meagre but prevail in the
hybrid and electric automobile sector. As options are very less and few hybrid and
electric cars are available within market, the scope of them getting replaced easily is very
less. However, with technological advancements, the chances of older vehicles getting
replaced get increased. Major firms like Tesla Motors are working rapidly in the electric
car segment and has patented many innovative technological tools and technologies.
However, reputation of Toyota group precedes such factors and thus, will lead the
automobile manufacturing entity to develop a cost effective, affordable and reliable
product for its cited customer base (Cherubini, Iasevoli and Michelini, 2015).
 Threat of new entrants: it is a weaker competitive force that may impact overall
performance of cited automobile manufacturing entity. The existing organisations like
Toyota, Tesla, Ford and Honda are market leaders and thus a newer firm possess a
negligible risk factor for the existing firm. For a new entrant to compete with these
existing giants, it must place higher investments, technical elements and significant
marketing has to be applied in improving the newer firm market position. This will help
Toyota Group to perform well and maintain its position as the world’s largest automobile
manufacturing firm. Besides this, it will also enhance the customer satisfaction level.
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The effective assessment of these competitive forces will help in rise in capacity of
handling of these competitive forces; this can be said that proper assessment of a business
operation will help to increase its performance. This will support Toyota Group to have a good
market share and customer satisfaction level (Thomas, 2015).
Market size and structure
Starting gradually, the hybrid and electric cars and vehicles gained an exquisite
popularity and success. This helps in effective planning of business strategies, elaborative and
engaging marketing and suitable governmental support is the major factor that has helped in
effective growth of market share of Electric and hybrid vehicles all over the world. Various
countries have varied perception and mindset about these vehicles and thus, the business share of
such vehicles in market is a major factor that impacts a firm's performance (Hekkert and van den
Hoed, 2017).
As per various surveys and analysis, it has been found that big companies like China,
USA and nations in EU are the major consumers of electric and hybrid vehicles. These nations
are very supportive for the use of electric and hybrid vehicles. Thus, it will help the firm to
improve its performance and sales. In recent 5 years, business of hybrids and electric cars has
been increased tremendously. In the year 2015, the sales were 0.62%, which got increased to
0.86% in 2016 and 1.34% in 2018. Norway has the highest number of plug-ins and hybrid
vehicles that makes it with the largest market share of hybrid and electric vehicles. The rise in
GDP and per capita income of people in many countries like India, Hong Kong etc.
European countries and China has the highest potential and market opportunities for such
vehicles and are booming as a major location for investing and setting up of manufacturing
plants. Besides this, extensive marketing approaches are followed within the organisation that
will help in effective rise in handling of business operations and activities. It will help in
improving the customer satisfaction level (Cano-Kollmann and et.al., 2018). Besides this,
effective marketing and promotional measures have been undertaken in consideration by various
automobile manufacturing firms. Apart from this, various acquisition, mergers and
collaborations are made in order to develop good and effective cars and other sort of vehicles.
Especially, electric cars are the most popular product in respective market segment. Preceding
this, are the buses and other automobiles that are based on electric or hybrid technologies
(Rimmer, 2017).
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Key issues faced and future growth
The electric and hybrid automobile manufacturing industries face many issues that can
impact its performance and growth to a greater extent.
Some major difficulties that are faced by cited business entity is:
 Absence of proper political support and economic viability will not help in proper
expansion of business sector (Budde, Alkemade and Hekkert, 2015).
 Effective marketing is required to meet operational activities and operations related to
development of electric cars.
 Proper handling of research process related to developing of an effective technology will
help in the growth of cited business firm in electric automobile sector.
In order to mitigate these issues and have a sustainable growth, Toyota Group must
effectively carry out its research and development process along with promotional measures.
Aspect of improving competitive position
Different organisational and operational aspects will be taken by Toyota Group into
effective consideration. It will support proper handling of business operations and activities that
leads to development and innovation of a high quality hybrid or electric vehicle. Various aspects
can be taken in consideration that will help in effective growth of firm (Hutchinson, Burgess and
Herrmann, 2014).
Toyota has to opt for proper technological advancement and implementation of proper
development of business operations and activities that will help in suitable rise in meeting of
business operations and activities, which will help in effective growth and development of a
firm. Besides this, the marketing strategy that is followed by an organisation must be handled in
an effective manner to improve their performance and revenue generation.
CONCLUSION
On the basis of effective assessment, this can be said that Toyota Group is one of the
major and leading automobile manufacturing firms. Suitable assessment of market sector,
structure and comparative forces using Porter's five-force model helped in handling of business
activities and operations. Other than this, evaluation of market size, its framework and trends
related to electric and hybrid vehicle segment has been analysed. Different key issues and their
future strategies for Toyota groups were evaluated.
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REFERENCES
Books and Journals
Budde, B., Alkemade, F. and Hekkert, M., 2015. On the relation between communication and
innovation activities: A comparison of hybrid electric and fuel cell vehicles. Environmental
Innovation and Societal Transitions, 14, pp.45-59.
Cano-Kollmann, M. and et.al., 2018. Burying the Hatchet for Catch-Up: Open Innovation among
Industry Laggards in the Automotive Industry. California Management Review, 60(2),
pp.17-42.
Cherubini, S., Iasevoli, G. and Michelini, L., 2015. Product-service systems in the electric car
industry: critical success factors in marketing. Journal of Cleaner Production, 97, pp.40-
49.
Hekkert, M. and van den Hoed, R., 2017. The Emergence of the Hybrid Vehicle at the Expense
of the Fuel-Cell Vehicle?. The Business of Sustainable Mobility: From Vision to Reality.
Hutchinson, T., Burgess, S. and Herrmann, G., 2014. Current hybrid-electric powertrain
architectures: Applying empirical design data to life cycle assessment and whole-life cost
analysis. Applied Energy, 119, pp.314-329.
Matsuo, S.and et.al., 2016. The new Toyota inline 4 cylinder 1.8 L ESTEC 2ZR-FXE gasoline
engine for hybrid car (No. 2016-01-0684). SAE Technical Paper.
Montazeri-Gh, M. and Mahmoodi-k, M., 2015. Development a new power management strategy
for power split hybrid electric vehicles. Transportation Research Part D: Transport and
Environment, 37, pp.79-96.
Penna, C.C. and Geels, F.W., 2015. Climate change and the slow reorientation of the American
car industry (1979–2012): An application and extension of the Dialectic Issue LifeCycle
(DILC) model. Research Policy, 44(5), pp.1029-1048.
Rimmer, M., 2017. Intellectual property and autonomous vehicles in a gridlock economy. A
Submission to the House of Representatives Standing Committee on Industry, Innovation,
and Science and Resource's inquiry into the social issues relating to land-based driveless
vehicles in Australia.
Thomas, M.T., 2015. Role of strategy in value capture from foresight exercises: firms’
responsiveness to long term trends in the passenger car industry. Foresight, 17(6), pp.574-
587.
Online
Toyota Porter 5 force model, 2015. [Online]. Available through: <https://research-
methodology.net/toyota-porters-five-forces-analysis/>
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