TOYOTA’s EUROPEAN OPERATING EXPOSURE

1. TOYOTA’s EUROPEAN OPERATING EXPOSURE Presented by : AgustinusBanu M 0849005 Harris Hermawan 0849024 RakhmadAbidin 0849049

2. 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.

4. 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 ($82.5 million at ¥120/$).

5. 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

6. Daily Exchange Rates: Japanese Yen per Euro

7. 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

8. 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

9. Daily Exchange Rates: British Pounds per Euro

10. Q & A Mengapa Toyota membutuhkanwaktuyg lama untukmemindahkanmanufactur-nyauntukpasarEropakeEropa? • Manufacturautomobilmerupakanindustri yang sangatkomplekdancapital intensive • Keuntungandarieconomic of scope daneconomic of scale

11. Jika pound Inggrisbergabungdengan EMU makaapakahmasalahnyaterselesaikan ? Dan bagaimana/seberapabesarkemungkinanhaltersebutterjadi? • Menghilangkancurrency risk antaraInggrisdanEropatetapitidakantaraJepangdanEropa • Akanmenghilangkandeviasidalamnilaimatauangantarapounddaneuro • KemungkinanInggrisbergabungdengan EMU memangadameskipunbelumadarencana yang dinyatakansecararesmi • PresidenKomisiEropa-Jose Manuel BarrosodanPerdanaMenteriInggris – Gordon Brown, mengisyaratkanhaltersebut

12. JikaAndamenjadiMr.SuheibagaimanaAndamengkategorikanmasalahdansolusinya. Apa yang menjadimasalahjangkapendekdanjangkapanjangnya? • Permasalahutamaadalahperubahan exchange rate yang menjadipemicupermasalahanharga • Jatuhyanilai Euro terhadap Yen padatahun 1999 hingga semester awal 2000 cukupsignifikan • UntukmelayanipasarEropasebagianbesarmasihekspordariJepang • Solusi : • Tetapdengankondisisaatini • Memindahkanautomobile’s content keEropa

13. Tindakanapa yang Andarekomendasikanke Toyota Eropauntukmemecahkanmasalahkerugianoperasitersebut? • Jika Toyota maumenerimakeuntungan yang “sedikit” demimenjagapangsapasarnyamakakebijakanoperasiinidapattetapdilanjutkan Euro mulaimenguatkembaliterhadap Yen • Operasionaldi UK ditinjaukembalimengingatstabilitasdan “gagah” nya pound terhadap Euro • Mempertimbangkanuntukmemindahoperasionaldanstrukturbiayake EMU

14. TERIMA KASIH