TOYOTA’s EUROPEAN OPERATING EXPOSURE Presented by : Agustinus Banu M 0849005 Harris Hermawan 0849024 Rakhmad Abidin 0849049

Toyota and Auto Manufacturing Toyota Motor Company was the number-one automobile manufacturer in Japan, the third largest manufacturer in the world by unit sales (5.5 million units or one auto every six seconds), but number eight in sales in continental Europe It had continued to rationalize its manufacturing along regional lines and to increase the amount of local manufacturing in North America.

Toyota Motor Europe sold 634,000 automobils in 2000 In November 2000, Toyota Motor Europe announced publicly that it would not generate profits for the next two years due to the weakness of the euro. TMEM expected significant growth in European sales and was planning to expand European manufacturing and sales to 800,000 units by 2005 But for fiscal 2001, the unit reported operating losses of ¥9.897 billion ($82.5 million at ¥120/$).

Currency Exposure One source of the continuing operating losses suffered by TMEM was the falling value of the euro Throughout 1999 and the first helf of 2000 the yen stengthened against the euro (see exhibit B) Although the euro regained some ground in late 2000, it remained relatively weak As the yen rose against the euro, costs increased significantly when measured in euro terms

Daily Exchange Rates: Japanese Yen per Euro

Management Response In 2001 Toyota management had started up some assembly operations in Valenciennes, France Although Valenciennes still constituted a relatively small percentage of total European sales as of January 2002, Toyota planned to continue to expand its capacity and capabilities to source about 25% of European sales by 2004 The continuing problem, however, was that it was an assembly facility, meaning that much of the expensive value-added content of the autos being assembled was still based in either Japan or the United Kingdom

Management Response - con’t Mr. Shuhei, with the approval of Mr. Okuda, had also initiated a local sourcing and procurement program from the United Kingdom manufacturing operations But again, the continuing problem of the euro’s weakness against the British pound reduced the effectiveness of even this solution

Daily Exchange Rates: British Pounds per Euro

Q & A Mengapa Toyota membutuhkan waktu yg lama untuk memindahkan manufactur-nya untuk pasar Eropa ke Eropa? Manufactur automobil merupakan industri yang sangat komplek dan capital intensive Keuntungan dari economic of scope dan economic of scale

Dan bagaimana/seberapa besar kemungkinan hal tersebut terjadi? Jika pound Inggris bergabung dengan EMU maka apakah masalahnya terselesaikan ? Dan bagaimana/seberapa besar kemungkinan hal tersebut terjadi? Menghilangkan currency risk antara Inggris dan Eropa tetapi tidak antara Jepang dan Eropa Akan menghilangkan deviasi dalam nilai mata uang antara pound dan euro Kemungkinan Inggris bergabung dengan EMU memang ada meskipun belum ada rencana yang dinyatakan secara resmi Presiden Komisi Eropa-Jose Manuel Barroso dan Perdana Menteri Inggris – Gordon Brown, mengisyaratkan hal tersebut

Jika Anda menjadi Mr.Suhei bagaimana Anda mengkategorikan masalah dan solusinya. Apa yang menjadi masalah jangka pendek dan jangka panjangnya? Permasalah utama adalah perubahan exchange rate yang menjadi pemicu permasalahan harga Jatuhya nilai Euro terhadap Yen pada tahun 1999 hingga semester awal 2000 cukup signifikan Untuk melayani pasar Eropa sebagian besar masih ekspor dari Jepang Solusi : Tetap dengan kondisi saat ini Memindahkan automobile’s content ke Eropa

Tindakan apa yang Anda rekomendasikan ke Toyota Eropa untuk memecahkan masalah kerugian operasi tersebut? Jika Toyota mau menerima keuntungan yang “sedikit” demi menjaga pangsa pasarnya maka kebijakan operasi ini dapat tetap dilanjutkan Euro mulai menguat kembali terhadap Yen Operasional di UK ditinjau kembali mengingat stabilitas dan “gagah” nya pound terhadap Euro Mempertimbangkan untuk memindah operasional dan struktur biaya ke EMU

TERIMA KASIH