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Driving the Mainstream Market to Purchase Hybrid Electric Vehicles - Case Study Example

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The case study "Driving the Mainstream Market to Purchase Hybrid Electric Vehicles" states that The automobile manufacturing industry is one of the most highly competitive industries in the global business. Toyota Inc., Ford, and General Motors positioned themselves as the market leaders…
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Driving the Mainstream Market to Purchase Hybrid Electric Vehicles
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Download file to see previous pages Toyota has come out ahead in this competition by pioneering the production of hybrid and electric vehicles that apart from being cheaper to operate they also earn the goodwill of customers and environment conservationists. This project has however really impacted negatively on their financial statement and the company is currently contemplating other cheaper, yet more profitable, vehicle production. However, there are dissenting opinions on their discontinuation with regards to their profitability as research indicates that hybrid and electric vehicles contribute significantly to the profits of the company especially in the sales made outside the country. There is thus a need to do a comprehensive cost-benefit analysis that will clearly inform the decision of whether to continue their production and just how their profitability is significant in the financial books of Toyota. Electric Hybrid Vehicles Introduction Toyota Motor Incorporation is the largest automobile manufacturers as of 2013 according to the Global Watch report. The company was started in 1937 and has been a global leader since then set the trend for other automobile manufacturers. ...
taken for hybrid and electric vehicles with some arguing that there is no sufficient market to sustain their production while some analysts view that their products should not be discontinued since in the last half-decade their production has accounted to an average of 15% of the company’s total profit (Pistoia, 2010). Toyota’s president Akio Toyoda was the last authoritative figure calling for the scraping of hybrid and electric car production since, in his opinion, there is no enough market with long term benefits. Sales and Revenue This is a summary of the company’s net incomes, return on investments, net income per share and dividend per share from 2008 through 2013. 2008 2009 2010 2011 2012 2013 Net Income(Billions Yen) 67 40 27 47 66 67 ROE (%) 11.6 7.2 4.9 8.0 10.7 9.6 Net Income per Share 192.4 114.7 78.0 134.8 189.3 192.5 Dividend per Share 30.0 26.0 16.0 28.0 42.0 42.0 This summary was derived from the consolidated financial books of Toyota Inc. and as is clear from the summary, since 2008 when the company actively started selling the hybrid vehicle the profits is increasing except in 2010 when the company experienced a hitch in production and lost a significant market share. The net income per share and the dividend per share rates are healthy and increasing too. Below is an illustration of Toyota’s dominance in the automobile industry. Fig. 2 As is evident the dominance is growing from 2011’s 9.03% of the market share to 9.6% in 2013. This too can be attributed to its innovation strength starting with hybrid and electric vehicles (The Washington Post, 2013). All the major competitors, that is Ford, Volkswagen, Chevrolet, and Hyundai, who are yet to embrace this technology fully have witnessed a shrink in their respective market size as the pie chart depicts. ...Download file to see next pagesRead More
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