Page 62 - Toyota Under Fire

THE OIL CRISIS AND THE GREA T RECESSION

The key long-term economic trends identified by Toyota’s analy-
sis in the spring of 2009 (paraphrased from Toyota sources) were
Rising Fuel Prices. Fossil fuel shortages will get more severe
over time, driving up the prices of oil and gas. In the United
States, the huge federal budget deficit will create pressure to
increase taxes on gas, bringing U.S. prices more in line with
those in the rest of the world. Prices will reapproach their
2008 peak and surpass it.
Environmental Consciousness. Not only has global warm-
ing shifted from a scientific curiosity to an accepted fact,
but general environmental consciousness about air quality,
recycling, and reuse is becoming a mainstream concern. It
is not clear whether individual purchasers will pay extra for
an environmentally conscious car, but legislation requiring
low emissions will become increasingly strident.

The short-term trends that were identified were

Weakened Competition. Most competitors would fare
worse than Toyota during the recession, downsizing and
cutting R&D spending, which would further reduce their
capability to design and build competitive products. In the
United States, the Detroit Three were in a weakened state.
This presented an opportunity to gain market share.

Pent-up Demand. North American vehicles in recent years
have been scrapped at a rate of 13.5 million units per year,
yet production in 2009 was operating at the annualized rate
of 9 to 10 million units. Coming out of the recession, there
would likely be a surge in demand.
Instilled Sense of Urgency. Toyota employees didn’t need to be
prodded into acquiring a mentality of crisis and scarcity—

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