Despite these allegations, the biggest automaker in the world managed to earn $245 billion in revenue for the fiscal year 2021 in addition to continuing to exist independently. Toyota Motor Corp. (TM) earns money through three main business divisions: manufacturing of non-automotive machinery and other ventures, financial services, and automotive.
Toyota, a Japanese company with global headquarters, started out making looms in the 1920s. Founder Sakichi Toyoda entered the automobile industry after creating and patenting an automated loom. The Toyota Motor Company was founded in 1937, however the first Toyota vehicles were produced in the early 1930s.
Toyota began by concentrating on compact cars, but eventually branched out to make pickups, SUVs, trucks, sports cars, and other automobiles. The business grew through time to become among the biggest automakers in the world. In terms of revenue, Toyota is the second-largest manufacturer worldwide as of 2020, behind Volkswagen.
Toyota sold 7.6 million automobiles during the fiscal year 2021, 5.5 million (72.2%) of which were sold outside of Japan. Toyota considers North America to be the biggest source market outside of Japan. In North America, Toyota sold 2.3 million automobiles between April 2020 and March 2021.
Toyota recorded earnings of 27.2 trillion yen, or around $245 billion, in the same year. This was a decline of —8.9% from the prior year. 7 Toyota’s market capitalization was $247.6 billion as of October 2, 2021.
Toyota’s Business Segments
Toyota’s automotive division, which may be further broken down into distinct subsegments based on brand and geographic focus, accounts for the vast bulk of the company’s revenue. The business also generates money through a third, much smaller arm that specializes in unrelated business, as well as through its financial services division.
Toyota’s Automotive Business
Each separate business unit within Toyota’s automobile division strives to represent streamlined Japanese efficiency. The company’s famed luxury brand, Lexus, is the first and most successful of those.
Lexus celebrated selling 10 million vehicles in 2019. Despite being a Japanese company, Lexus sells a wildly disproportionate amount of its cars in the United States, with annual sales in North America hovering around 300,000.
With 2.1 million vehicles delivered in 2020, the United States will be the largest market for the Toyota brand (including Lexus). With 1.8 million automobiles sold, China came in second, followed by Japan with 1.5 million sales.
The Lexus brand was established in the early 1990s as a rival to emerging luxury brands from other mass-market Japanese automakers, like Honda’s Acura and Nissan’s Infiniti. A generation later, Lexus has overtaken these companies and is now directly competing with Mercedes-Benz and BMW in the luxury market. Success for Lexus at the next level hasn’t exactly come easily so far.
The company also includes sections for the sale of cars according to regions. For instance, the Texas-based holding company Toyota Motor North America designs, manufactures, and markets specific Toyota vehicles in North America. Toyota’s Camry was the best-selling sedan so far in 2021 and the sixth-best-selling car overall in the United States in 2020.
Toyota’s Financial Services Business
Toyota generates a relatively tiny amount of its revenue from its financial activities, compared to certain other big automakers. Although Toyota’s financial services segment is expanding more quickly than auto sales, the firm still prioritizes lending over manufacturing. In the fiscal year 2021, automotive operations made up 90.5% of global sales revenue while financial services made up just 7.9%.
A division of Toyota, Toyota Financial Services, specializes in credit cards, auto financing, and other related services. It works in almost 40 different nations.
Toyota’s Other Businesses
In addition to selling and financing cars, Toyota makes money through various business ventures and investments. The corporation owns shares in other automakers like Mazda, Isuzu, and Subaru.
Toyota was one of the top 50 most valuable businesses in the world as of 2021.
It also has interests in other industries, including aircraft, robotics, and biotechnology. Toyota has placed a lot of emphasis on the creation of hybrid electric vehicles and related technology over the past ten years.
Toyota’s Recent Developments
Although a lower percentage of sales occur in Europe and other regions of Asia, Japan and North America account for the majority of Toyota’s vehicle sales.
Since its inception, Toyota has adhered to what it calls the “Guiding Principles of Toyota,” a set of seven principles and values that drive all business choices.
In the immediate term, the company plans to concentrate on promoting innovation, notably in the fields of robots and artificial intelligence (AI), and on expanding its business, according to its 2019 Corporate Governance Report.
The corporation emphasized encouraging innovation as a “effort that we must continue through, in order to survive in a moment of profound transition that could happen only once in a hundred years and achieve a new mobility society” in its Corporate Governance Report of 2021.
The company wants to improve its vehicles’ “connected” capabilities and develop new mobility services in the future, among other things. The business is particularly concerned with sustainability and the environment, and Toyota has set a target of lowering emissions from new vehicles by 90% by 2050.
Toyota’s Key Challenges
Despite being the industry leader in the automobile industry, Toyota nevertheless faces several difficulties. One of these is competition, particularly from other well-known car manufacturers around the world. Toyota now competes in all vehicle categories, posing threats to its sales from a number of competitors.
Adaptation Is Key
The business must also keep evolving if it is to continue succeeding. Toyota has a strong brand recognition and a devoted following of customers, but shifting consumer preferences, cutting-edge technology, and a heightened awareness of environmental responsibility necessitate significant financial investments in the creation of new goods. Toyota could lose business if it does not foresee how the automobile industry would develop and respond appropriately.
The Bottom Line
One of the biggest automakers in the world is Toyota. Although it operates in other industries, such financial services, the production and sale of vehicles account for the lion’s share of its revenue. Its main markets, where it is focusing its efforts and sees room for expansion, are China, Japan, and North America. Toyota must be competitive and follow market trends, such as sustainability and artificial intelligence (AI), to stay relevant among the many automobile manufacturers in the world .
Is Toyota a Profitable Company?
Toyota is an extremely profitable firm. Toyota announced a net income of 2.28 trillion yen, or roughly $20.5 billion, for the fiscal year that ended on March 31, 2021. With a net income of $19 billion the year before, this was an improvement.
Quick Summary: Toyota
- In 2021, Toyota recorded a global revenue of $27 trillion yen, or roughly $245 billion.
- Toyota’s sales of automobiles account for almost 90% of its revenue. The company’s financial services division and other commercial operations account for a smaller share of its revenue.
- Toyota also produces forklift trucks and other industrial machines in addition to passenger cars.
- Toyota passed Volkswagen to take the title of biggest automaker in the world in 2021.
- The Toyota Camry, which is the most popular sedan in the US, is made by Toyota.
Last Updated on February 7, 2023 by NetworkPalava Admin