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Chapter 13
Problem
5. Outline a typical product life cycle (PLC) with reference to one specific industry. In
the automobile industry, in particular car manufacturers; Toyota or Proton produce
different models (1.5 cc and /or 1.3 cc) to capture market shares. Briefly, explain the
start and end of a particular model.
TOYOTA
Toyota primarily conducts business in the automotive industry. Toyota also conducts
business in finance and other industries. Toyota sold 9,116 thousand vehicles in fiscal
2014 on a consolidated basis. Toyota had net revenues of 25,691.9 billion and net
income attributable to Toyota Motor Corporation of 1,823.1 billion in fiscal 2014.
Automotive Operations
Toyotas revenues from its automotive operations were 23,781.4 billion in fiscal 2014,
20,419.1 billion in fiscal 2013 and 16,994.5 billion in fiscal 2012. Toyota produces and
sells passenger cars, minivans and commercial vehicles such as trucks. Toyota Motor
Corporations subsidiary, Daihatsu Motor Co., Ltd. (Daihatsu), produces and sells
mini-vehicles and compact cars. Hino Motors, Ltd. (Hino), also a subsidiary of Toyota
Motor Corporation, produces and sells commercial vehicles such as trucks and buses.
Toyota also manufactures automotive parts, components and accessories for its own use
and for sale to others.
Vehicle Models
Toyotas vehicles (produced by Toyota, Daihatsu and Hino) can be classified into two
categories: hybrid vehicles and conventional engine vehicles. Toyotas product line-up
includes subcompact and compact cars, mini-vehicles, mid-size, luxury, sports and
specialty cars, recreational and sport-utility vehicles, pickup trucks, minivans, trucks and
buses.

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As of 2014, Toyota officially lists approximately 70 different models sold under its
namesake brand, including sedans, coupes, vans, trucks, hybrids, and crossovers. Many
of these models are produced as passenger sedans, which range from the
subcompact Toyota

Yaris,

to

compact Corolla,

to

mid-size Camry,

and

full-

size Avalon. Vans include the Previa/Estima, Sienna, and others. Several small cars, such
as the xB and tC, are sold under the Scion brand.
1. Introduction Stage
Toyota Prius C
This stage of the cycle could be the most expensive for a company launching a new car.
The size of the market for the hybrid is small, which means sales are low, although they
will be increasing. Prius was brought in for sale in 2009. Currently there are over 6,100
units of Prius on the roads and with the Prius C, there are some 8,500 units on the roads.
On 2012, UMW Toyota Motor launched the new Prius C. The Prius C, known as Aqua in
Japan, is an all new hybrid model for the B-segment, meant to go head-to-head with the
Honda Insight. The price is RM97000 on the road including insurance.
On the other hand, the cost of things like research and development, consumer testing,
and the marketing needed to launch the product can be very high, especially if its a
competitive sector. The lower final price vs the higher initial estimate wasnt a deliberate
strategy but a result of hard work till the very end on UMW Toyotas part. That is a
great price for whats on offer. This RM97000 price is quite a bit lower from the initial
RM104000 price estimated by UMW Toyota Motor previously, and makes the Prius C
look even better value against the RM99812.15 Honda Insight, which is its main rival.
Till now, the brisk selling Insight has been the most affordable hybrid car in Malaysia,
and the only one priced below RM100000.
The Prius C is powered by Toyotas Hybrid Synergy Drive full hybrid system, which
here consists of a 1.5-litre petrol engine and an electric motor. The former is the 1NZFXE engine related to the one in the Vios. However, for this hybrid application, the VVT-

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i mill runs on an Atkinson cycle with a higher compression ratio (13.4:1) and unique
valve open/close characteristics. It makes 73 PS and 111 Nm of torque.
Proton Saga FLX SE
The Proton Saga FLX SE was launched on 30 November 2011. It is powered by a
108 hp CamPro IAFM+ 1.6 litre engine, paired to a CVT. Driver and passenger airbags as
well as ABS with EBD come standard. A new body kit, smoked rear lamps and 15-inch
alloy wheels give the FLX SE a sportier, more aggressive look. Leather upholstery and
red stitching is present on the interior. It is only available in two colours, Solid White and
Fire Red, and tentatively priced at RM49899, around RM6500 less than its primary
competitor, the Perodua MyVi SE 1.5 automatic.
Comparison
Compare to Toyota Prius C, Proton Saga FLX SE is cheaper and affordable when they
first introduced in public. This is because Proton target customers mostly are fresh
graduates or youngsters age 25-35 years old, young executives; and small and mediumsized family with monthly household income of RM2000 and above.
For Prius C, Toyota Motor Corporation had announced that they want to produce fueleconomy cars and less maintenance charges. Thats one of the reasons Toyota Motor
Corporation has come out with a lot of hybrid type cars recently. Its hybrid vehicles has
resulted in a reduction of approximately 58 million tons of CO2 emissions than would
have been emitted by gasoline-powered vehicles of similar size and driving performance.
Toyota also estimates that its hybrid vehicles have saved approximately 22 million
kiloliters of gasoline compared to the amount used by gasoline-powered vehicles of
similar sizes. Toyota aims to continue its efforts to offer a diverse line-up of hybrid
vehicles, enhance engine power while improving fuel economy and otherwise work
towards increasing the sales of hybrid vehicles.

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2. Growth Stage
In 2013, Toyota Motor Corp. posted a record quarterly profit of 562.2 billion ($5.63
billion) and raised its outlook for the year, benefiting from years of cost-cutting and a
windfall from a weaker yen.
Toyota's bottom line for its fiscal first quarter represents the most money ever made in a
single quarter by a nonfinancial Japanese company, said Nomura Securities Co. The
profit illustrates the resurgence of Japan's auto industry and the nation's exporters after
the dramatic weakening of the yen under Prime Minister Shinzo Abe's pro-growth
economic policies.
That weaker currency, which makes Japanese goods cheaper abroad and increases the
value of earnings from overseas, was responsible for the lion's share of Toyota's quarterly
profit and its improved profit outlook. It lifted its fiscal-year earnings target by 8% to
1.48 trillion. Currency gains during the quarter ended June 30 accounted for about 40%
of the company's 663.3 billion operating profit. Toyota left its currency assumption
unchanged at 90 to the dollar for the remainder of the fiscal year, well below the about
100 to the dollar mark that existed for most of its first quarter. Factoring in the firstquarter rate, it expects the full-year rate will end up averaging 92 to the dollar.
The company's executives stressed the strong performance wasn't due only to a more
favorable yen-conversion rate. Some 11% of the company's quarterly operating profit
came from the benefits of cost cuts, new models and production shifts. Rather than saying
it shows the achievements over the last three months it is more a reflection of the hard
work they've put in over the last four years.
4. Maturity Stage (Market Fragmentation)
Hybrid Vehicles
During the maturity stage, the product is established and the aim for the manufacturer is
now to maintain the market share they have built up. The message is clear: having found
homes in driveways around the world, hybrids have staying power. Since the launch of

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the Prius in 1997, Toyota has been gradually adding hybrid models throughout its range,
from the compact Yaris Hybrid to the recently announced RAV4 Hybrid. As of this
month, Toyota sells 30 hybrid passenger car models and one plug-in hybrid model in
more than 90 markets.
The worlds first mass-produced hybrid car was Toyotas Prius. It runs on an efficient
combination of a gasoline engine and motor. This system allows the Prius to travel more
efficiently than conventional engine vehicles of comparable size and performance. The
hybrid design of the Prius also results in the output of 75% less emission than the
maximum amount allowed by Japanese environmental regulations. Toyota views the
Prius as the cornerstone of its emphasis on designing and producing eco-friendly
automobiles.
In May 2008, Toyota introduced the hybrid version of the Crown, which is the signature
model of the Toyota brand, in Japan. In April 2009, the Lexus RX450h, which is the fully
remodeled Lexus RX400h, was successively introduced in Japan, North America and
Europe. The Prius, whose name has become synonymous with hybrid vehicles,
underwent its second full model change in May 2009. The hybrid vehicles HS250h and
SAI were introduced in July 2009 and December 2009, respectively. In December 2009,
Toyota began leasing the Prius plug-in hybrid equipped with a lithium ion battery
targeted at certain corporate users including electrical power companies. In January 2011,
the Lexus hybrid vehicle CT200h was also introduced. Further, Toyota introduced the
Prius (Prius Alpha) wagon in May 2011 and is planning further ways to enhance the
Prius series lineup. Furthermore, Toyota has strengthened its hybrid lineup by introducing
hybrid versions of the Camry in September 2011, the Alphard and the Vellfire in
November 2011, the compact hybrid vehicle Aqua in December 2011, the Prius plug-in
and the fully remodeled GS450h in January 2012, the Yaris HV in May 2012, ES300h in
July 2012, the Auris HV in November 2012 and the Avalon HV, the fully remodeled
Crown HV in December 2012, the fully remodeled IS300h in May 2013, the fully
remodeled Corolla Axio HV/Corolla Fielder HV in August 2013, the fully remodeled
Harrier HV in December 2013 and the fully remodeled Voxy HV/Noah HV in January

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2014. Toyota anticipates strong growth in the hybrid vehicles area and will continue to
introduce new models.
Toyota began limited sales of a fuel cell hybrid vehicle in Japan and the United States in
December 2002. In June 2005, Toyotas new fuel cell hybrid passenger vehicle became
the first in Japan to acquire vehicle type certification under the Road Vehicles Act, as
amended, on March 31, 2005, by Japans Ministry of Land, Infrastructure, Transport and
Tourism. Leases for the vehicle began in July 2005. By 2007, Toyota was able to make
improvements to start-up and cruising distance at temperatures below freezing, which
were technological challenges. Toyota has made advances by solving technological issues
such as the above and has been working towards the practical use of such solutions.
5. Decline Stage
On 2014, Toyota Motor Sales (TMS), U.S.A., Inc. stated that Toyota brand cars, which
make up nearly half of all company sales, saw a 2.9 percent drop to 103,888 units. Prius
hybrid sales dropped 16 percent to 18,582 units. Corolla sedan sales also fell, by 5.5
percent to 29,685. The Sienna minivan lost 8.6 percent of sales volume (to 11,027)
compared to 2013.
This shrinkage could be due to the market becoming saturated. It maybe because of all
the customers who will buy the Prius hybrid, Corolla sedan and Sienna minivan have
already purchased it, or because the consumers are switching to a different type of car.
While this decline may be inevitable, it may still be possible for Toyota Motor Sales
(TMS), U.S.A., Inc. to make some profit by switching to less-expensive production
methods and cheaper markets.

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