| La Lettre du GERPISA | no 121 (march 1998) |
On december 9th 1997, as the was a guest at Hotel Matignon, Mr Hisroshi Okuda, the chairman of Toyota announced the setting-up of his firm at Onnaing near Valenciennes. This is the occasion to comment on the presence of the first Japanese car-maker on the French market.
The setting up of Toyota in Europe dates back the late 1980S, a time when the system of import quotas and the prospect of the completion of the european market threatened Japanese car-makers with possible new and impassable barriers. Then Toyota decided to set-up in the North-West of Great Britain, in Burnaston. There, and from 1993 onward, the Japanese car-maker produced higher-medium range vehicles, Carina E, a type in the process of being renewed.
The sales of Toyota on the French market have remained rather poor. In 1993, the Japanese firm sold 17.300 vehicles on the French market, and hardly 20.000 in 1996. Famous for its four-wheel-drive and two-door sedan, Toyota lacks a wider reputation for its other designs. In the first eleven months of 1997, Toyota has a 1,2% market share in France, behing Nissan (set-up in Great Britain and Spain). In 1996, they sold less British-made vehicles in France than in Denmark. This is why they decided to set-up a plant in Valenciennes, in order to widen their part of the European market.
The investment of Toyota at Onnaing is rising up to 3,5 milliard francs at a first stage, with production starting in 2001. Public subsidies will rise to 25% of this investment at the most - 30 millions provided by the French central government. The foreseen capacity amounts to 100.000 units per year. Two thousand employments will be created ; the second step will create another thousand and is expected to be operational in 2005. It will bring the total capacity of the plant up to 200.000 units. On the very site where Toyota will produce, parts-makers will set-up. They will make complete parts and deliver them to the factory at short-time notice, as they do in Toyota City in Japan. Toyota will make practically nothing except the assembling of the cas, as the stamping will be entrsuted to a subcontractor. The firm has bee in touch with several French equipment-makers. As a whole, the project represents a more tha 9 milliard francs investment.
France being the second European car market (with 2.1 million cars registered in 1996) just after Germany, Toyota aims at increasing its share -today around 1%. While setting-up in an area where unemployment is high, the Japanese car-maker also makes sure of both the support of the body politic and the consumers'recognition. At the same time, they can also claim the car is French. On December 9th, Mr Okuda declared : "Toyota means to become a firm integrated with the local environment and a genuine citizen of the city and the area". Such a strategy has also proved a success in Kentucky, USA. The area of Valenciennes was chosen also because of tis position at the very center of Europe, wich provides the best means of distribution and communication facilities. Nord-Pas-de-Calais is within easy reach of both Great Britain and Germany. It is bordering the great European center of consumption and holds good plants and numerous parts-makers.
With 36.500 employments in car-making, the area rands third in the national car-production, just behind Ile-de-France and the Franche-Comté. Considering production alone, the North region, with 11,3% of the French manpower in car-making, succeeds in turning-out 570.000 vehicles, i.e. 16% of the national output. The region ist thus getting advantage of a wilful public policy encouraging the setting-up of car-making. French car-makers have established already : Renauld in Douai (Mégane) and Maubeuge (Kangoo), Sevelnord in Valenciennes (for the making of monospaces Peugeot 806, Citroën-Evasion, Fiat-Unlysse et Lancia-Zéta). Parts-makers have established as well : the Française de Mécanique, a subsidiary of Renault and PSA, makes engines in Douvrin, Delphi is settled in Douaisis, Bridgestone in Béthune ; during the last twelve months, the Japanese Ogura and Akebono Brake have announced their setting-up one in Onnaing and the other in Arras.
Toyota expects to produce in France 200.00 smal cars to compete with Renault Twingo or Ford Ka. The "Funtime" was introduced last September at the Francfort motor-show. The ultimate version will be exhibited at the Paris World Car Show in October 1998. After the "Asian car" and vehicles designed fr the North American market, Toyota, for the first time, launches out into making a vehicles specially devised for the European market. In so doing, they are trying to make good the poor adjustment of Japanese products fo European consumers. The "Funtime" should be marketed as early as 1999. It will be imported in France first. The "made in France" type will come in later with up to 60% built locally.
For Toyota, production and marketing are closely linked. The purpose is to increase their share of the French market from the today 1% to 2 or 3% after year 2000. Toyota aims at selling more tha 35.000 cars in France in 2000. The Valenciennes plant will also be used as a basis for export towards South, Central and Eastern Europe. Togetehr with the French setting up, there is a power rise of the British site ; there, they will start, by the end of 1998, the producing of lower-medium range -the Corolla- to compete with the Peugeot 306, the Renault Mégane and the Volkswagen Golf (it means an extra-investment of 1,7 milliard Francs and an increase of man-power from 2400 to 3000). Toyota's aim concerning the European market is definitedly ambitious since they wish to increase by 50% their share from today 420.000 units to 600.000 units by 2 000 (A 5% market share instead of 2-3% now), with 6O% built locally. Toyota intends to produce in Europe in 2 000 65% of vehicles marketed on the European market.
The first surge of Japanese investments in car-making during the nineteen eighties aimed at getting into the "European Fortress". On Januay 1st 2 OOO, the import-quotas will disappear, and the new strategy is not to push exports any more (for several years, Japanese car-makers have failed to reach their permitted quotas). It is rather to increase local production power in order to reach higher than the today 13% on the European market. The setting-up of Toyota in France is thus also an attempt to balance their sales at a world-level.
Finally, the decision made by Toyota to get established in France does not seem as surprising as many commentators would have it. By choosing France to make the " ", the Japanese firm obeys a strategy previously tested : first, to prefer implanting in areas where the firm has only small shares of the market and where the social environment makes certain the recognition of consumers ; then, to adjust products to the local market.
Not to mention the threats that such a choice represents for the other European car-makers, this decision sounds historical as it is the first time since world war second (except for Smart in Lorraine) that a foreign car-maker has set-up in France.