US low economic performances
Toyota’s poor sales performance has caused the company to consider taking up some drastic actions. For instance, in 2008, the company had planned on opening up another manufacturing plant in eth US. This was to be done in Mississippi. However, because of the US economic situation, car sales have gone down and it would not be wise to open up a new plant when already existing plants were already suffering. Reports indicate that the plants was supposed to take up a whooping one point three billion dollars as capital.
Since the economy would not back up such a move, Toyota’s executives have decided to postpone opening up the new plant until the year 2010. The US economy has also affected Toyota Rowley (2008) asserted that the company intends on exporting cars from their US plants to other parts of the world. Since their sales are so low here, the company is now looking towards more economically sound countries such as China. In this case, the US will only be a site for manufacturing the commodities while their sales will be conducted elsewhere.
Some of the models that Toyota may take to the Middle Eastern region and China include • SUVs • Sienna minivans • Others This move was made against the backdrop of the fifteen million declines in sales fro automobiles. While these reports have not been fully conformed by their company representatives, there are certain indications that prove these reports. For instance, Middle Eastern countries are oil rich and therefore, their economics can sustain automobile purchases. Statistics indicate that Toyota’s Sequoias are performing very well in that market.
Consequently, taking those models a way from the US market to the Middle Eastern region would be quite feasibility. This is also the reason why the company’s international sales were on the increase because Middle Eastern drivers purchased more vehicles than their Chinese counterparts. The reducing US economy has adversely affected Toyota because it can be seen form the why the company’s production level have declined. Taking the example of plant in Texas; many employees are now dealing with research and development while others are undergoing training.
Only a small number have been left to deal with actual production. The same trend is also occurring in the company’s Indiana plant. This goes to show that the company is currently not utilizing their restive employees’ potential and this will go a long way in affecting their dales negatively. Shown below is graphical representation of just how drastic the situation is in the US Retrieved from // http://econoblog101. wordpress. com/2008/02/19/graphs-on-the-us-economy/ On line with the US low economic performances, the company announced that they had reduced their projected sales for the fiscal year 2008.
The company has predicted that they would sell nine pint eight five million cars this year throughout the world. However, because the poorly performing US economy, the company has decided to keep this figure at nine point three seven percent. The reason behind this overall that one of their most important geographical segments; the US has recorded such high declines in sales. The company gave the following reason for cutting down on these projections • High cost of raw materials • Plummeting oil prices • Poor US economy