Section 2. European Operations Become Autonomous

Item 1. Sales Bolstered as Markets Stagnate

Sales volume growth slows

The early 1990s saw the Gulf War, war in the former Yugoslavia, and a European currency crisis. The European automotive market contracted rapidly due to the resulting economic downturn. As a consequence, new cars sales in Europe fell to 14.6 million units in 1993, and the core Western European market declined to 12.5 million units, the lowest level in 20 years. Subsequently, the Western European market stabilized at the 16 million-unit level. As a result of expansion from 2004 of the Eastern European market-including the rapidly-growing Russian market-Europe as a whole set a new record of 22.4 million units in 2007.

Following the collapse of Lehman Brothers in September 2008, however, the European market declined drastically. The effects were somewhat delayed in Russia, but sales volumes were down sharply starting in 2009. A number of European governments implemented stimulus measures including scrap incentive programs1 in response to the rapidly contracting market, but even so, the European market as a whole fell to 18.52 million units in 2009 (down 18 percent from 2007). In addition, a fiscal crisis broke out in Greece, and the European automotive market remained stagnant in 2010.

In addition to Toyota vehicles being subject to the voluntary export restraints on Japanese vehicles until 1999 and the local import monitoring system, they were also affected by a rising yen from 1993 to 1995. As a result, sales of Toyota vehicles were sluggish, but they finally surpassed the 500,000-unit level in 1997. The following year, Toyota surpassed Nissan Motors Co., Ltd. in the European market to become the best selling Japanese auto brand.

Later, the Russian market expanded, and Toyota vehicles set new sales records for 11 consecutive years until 2007. The impact of the collapse of Lehman Brothers, however, was substantial, and Toyota's sales in 2008 were 1.12 million units, down from 1.24 million units in 2007, and Toyota was unable to set a 12th consecutive record of growth in 2008.

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