Toyota Motor may be eating other automakers’ lunch in North America and Europe, but it’s having problems developing a
successful strategy for emerging markets in Brazil, Russia, India and China.
Established automakers around
the world are rushing to plant a flag in these markets of the future, but Toyota finds itself handicapped by the
strategy that led it to success elsewhere – a focus on quality and safety. The problem is that Toyota has made
market-leading quality a cornerstone of its corporate identity, a strategy that plays well in established markets with
sophisticated buyers, but one that just doesn’t resonate with cost-conscious customers in emerging markets.
As a result, Toyota’s most successful models are priced out of reach for the majority of emerging market consumers,
and the company admits it badly needs a new, cheap, no frills compact model to pump up sales volume in countries like
India, where price is king.
A partnership with small-car specialist Daihatsu is an obvious solution, but
Daihatsu wants to grow its own brand in overseas markets, independently of Toyota.
However Toyota solves
this problem (and I wouldn’t bet against them), the result should be the fuel for countless B-school case studies in
the next five years.