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Efficiency in Automobile Industry (Toyota)

Efficiency enables companies to produce a product at the lowest cost possible while making a profit. It is an important strategy because it ensures that the product is not overpriced; hence, most middle-class and lower-class clients can afford it. It also helps firms to make profits despite lowering their production costs. Many companies ensure efficiency in their production by producing large units because it attracts cost advantages over smaller units. When the production units are large, the cost of production is more favourable for the companies than if they produce small units of the products. In different industries, various companies vary in their production strategies. For example, some firms prefer producing expensive products that sell at high costs making huge profits. Contrary, others produce large units of the same products at lower costs attracting many customers where the cost is relatively lower. In the automobile industry, Toyota is an excellent example of companies that is efficient in its production compared to its peer company Honda. These companies have faced similar economic, political, or global challenges.

Efficiency in the automobile industry is therefore dependent on the average build time. This is the average time used by the manufacturer to build one car. Toyota has now been a great company to ensure efficiency by lowering its average build time. The company’s average build time for a new car is roughly 4-12 weeks (Mishina, 2018). However, this may be prone to change depending on the type of models and the company’s vast model lineup, where it may take up to six months. On the other hand, Honda’s average build time is pretty exact, where it usually takes two months. The customers wait about two months for a specific Honda model. Even so, Toyota manufactures large units of vehicles which lowers their production costs compared to Honda. This enables the company to offer affordable vehicles to its customers, increasing its customer base and also strengthening its brand awareness.

Despite the production level of the automobile industry, other factors that determine efficiency in the industry include quality, information technology, and product innovation. Quality is a crucial factor in efficiency because it covers the safety and reliability of the vehicle from each brand. For example, Toyota is ahead of its competitors like Honda in terms of reliability. The company redesigns year-to-year, ensuring sold updates and rectifying issues that were found in previous model years. This makes Toyota vehicles more reliable. Honda is also good in reliability, but its competitor, Toyota, comes ahead. For example, Toyota’s most popular vehicles, like Toyota Corolla and Camry, are rated well for staying on the road and lasting for hundreds of thousands of miles.

Toyota is also known for its innovation level in the manufacturing of its vehicles. It ensures that every customer is concerned about their vehicles by having more numerous car models than any other company in the industry. Toyota’s innovation in the industry is at a high level because it owns many car models compared to Honda. An increase in number of vehicle models enables the company to be more efficient than its competitors. This is because it can attract a wide range of customers from one model to another. The different models vary in features and prices, which ensures that the firm sells both expensive and cheap vehicles to its customers. For example, in today’s economy, it is crucial to save gas pumps. Toyota learns and analyzes the economy and makes vehicles that are gas friendly. However, they do not sacrifice performance for fuel efficiency. Many people prefer fuel-efficient vehicles because of the high-cost living standards. This makes them choose some car models over others, aiming to save on fuel. To address this feature, Toyota has some of its models that do not consume more fuel. Therefore, it makes the company stand out in the industry and maximizes its financial performance.

Toyota outperforms Honda in terms of the models they manufacture. Toyota’s wide range of vehicle models enables them to lower their production costs compared, which makes it easy to provide their vehicles to the market at affordable prices. Though both brands produce affordable cars, Toyota also outstands Honda because of their model variety. Records show that Toyota performs well financially in the automobile industry than Honda Company. In 2014, Toyota was ranked 12 while Honda was 70, where Toyota’s revenue was $234 billion (Corporation., n.d.). During the same year, Honda Company reported sales of roughly $108. The profits earned from the two companies in the same year were $17.9 billion and $5.6 billion, respectively. This shows that Toyota makes high sales hence, higher returns from its operations. When a company makes a high amount of profits, it is more likely to attract investors and may invest heavily in technology which improves the quality of its products. For example, due to high returns from Toyota’s sales, the company is said to use advanced technology in manufacturing its vehicles (Aini et al., 2020). Advancement in technology also plays a significant role in maximizing the number of vehicles manufactured in a certain period.

Therefore, efficiency and effectiveness in companies may be determined by the ability of the manufacturer to produce products at a lower production cost as possible while making profits. In the case of Toyota, the company has the advantage of producing large volumes of vehicles at a time which reduces its production costs. It is also evident that efficiency in the automobile industry is determined by the quality and the company’s innovation in its production process. Despite aiming to produce fuel-efficient vehicles, brands should not compromise their quality. The main goal of every company in the industry is to maximize its profits, and they should also be objected to providing quality products to customers to show the value for consumers’ money.


Aini, S., Lubis, M., Witjaksono, R. W., & Hanifatul Azizah, A. (2020). Analysis of critical success factors on ERP implementation in PT. toyota Astra motor using extended information system success model. 2020 3rd International Conference on Mechanical, Electronics, Computer, and Industrial Technology (MECnIT).

CORPORATION., T. M. (n.d.). Toyota Motor Corporation official global website. Toyota Motor Corporation Official Global Website.

Mishina, K. (2018). Beyond flexibility: Toyota’s robust process-flow architecture. Coping with Variety, 149-180.


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