Toyota Auris Hybrid project PDF

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TOYTO business plan...

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Arab Academy for science and Technology

MBA Program

Consumer Behavior

A Thesis on hybrid cars with focus on Toyota Auris Hybrid

Contributors Mohamed Abulwahab Abuzaid Mohamed Abdulrahman Sayed Dalia Wagi Ola Sharaoui Ahmed Abdulwahab Abuzaid

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Industry description (Source www.jpmorgan.com/global/research/electric-vehicles)

The car industry is undergoing a radical transformation, with most carmakers agreeing the next 10 years will bring more change than the two previous decades. The next target date cited by automakers as a tipping point is 2025, when everything from materials and fuel to cost and the companies that build cars are set to look dramatically different. In this report, the J.P. Morgan Research team explores the rise of the electric vehicle and what the industry will look like by 2025. SHIFTING GEARS TO ELECTRIC VEHICLES Automakers are preparing to phase out cars powered solely by internal combustion engines (ICEs) as governments look to tackle fuel emissions. The growth in electric vehicles (EVs) and hybrid electric vehicles (HEVs) is climbing and by 2025, EVs and HEVs will account for an estimated 30% of all vehicle sales. Comparatively, in 2016 just under 1 million vehicles or 1% of global auto sales came from plug-in electric vehicles (PEVs).1 By 2025, J.P. Morgan estimates this will rise close to 8.4 million vehicles or a 7.7% market share. While this jump is significant, it doesn’t compare to the kind of growth expected in HEVs - cars that combine a fuel engine with electric elements. This sector is forecast to swell from just 3% of global market share to more than 25 million vehicles or 23% of global sales over the same period.1 this leaves pure-ICE vehicles with around 70% of the market share in 2025, with this falling to around 40% by 2030, predominantly in emerging markets.

8%20%3%9%7 %1%3%1% For both North America and Europe, hybrids and BEVs are set to lead over the next decade as plug-in hybrids are not proving too popular in either region. In Europe, plug-in electric vehicles (BEVs and PHEVs) will rise from roughly a 2% share of total new sales in 2017 to around 9% by 2025, nearly eclipsing 1.5 million vehicles by the middle of the next decade. A dramatic move away from ICE-only vehicles is expected and by 2025 only plug-in electric vehicles and HEVs will likely be sold. Over that time period, J.P. Morgan forecasts sales of plug-in electric vehicles in Japan and Korea will reach 384,000 vehicles, representing a market share of 6%, while HEVs will approach 1.8 million vehicles or 27% of total sales. Meanwhile in the U.S., tougher fuel economy regulation will likely push automakers to expand their EV offerings, but not with the same degree of urgency as in Europe, where there are looming carbon dioxide emissions targets and fines. Nevertheless, overall EV sales – including BEV, PHEV and hybrids – are estimated to account for over 38% of total sales in 2025. 1 CHINA RACING AHEAD In terms of production and sales of electric cars, no other nation comes close to China. By 2020, the country is expected to account for a staggering 59% of global sales before easing slightly to 55% by 2025 according to J.P. Morgan data. The rise of mini-EVs with smaller battery packs designed for short-range driving (around 100-150 km) has helped boost the popularity of EVs in China. Prices for mini-EVs start at around RMB 40,000 or $6,250 USD making them affordable. J.P. Morgan’s Research team forecasts the compound annual growth rate (CAGR) of China’s new electric vehicle (NEV) market (EVs and PHEVs) is set to hit 46% by 2020, with 2.5 million units produced that year — 25% above the government's target of 2 million units. This forecast is based on a few key drivers:

RAPID BATTERY COST REDUCTIONS CHARGING FACILITIES NEW SUBSIDIES TWO-CREDIT POLICIES PUBLIC TRANSPORT

RAPID BATTERY COST REDUCTIONS

Prices are falling by 15-20% per annum as the scale of production ramps up and battery suppliers increasingly give away their margins. This puts China on track to produce EV and internal combustion engine technology at cost parity (for compact vehicles) by 2020. Revised subsidy schemes for 2018 also mean certain models will reach price parity after discounts this year.

ELECTRIC VEHICLE BATTERIES EV battery manufacturing is dominated by a relatively small number of players. Asian manufacturers hold the lion's share of global production, with Panasonic commanding a 40% stake, followed by LG Chem with an 18% market share. CATL is leading the investment in China and currently accounts for 23% of the global market share. Battery prices have fallen dramatically this decade from around $1,000/kilowatt hour (kWh) in 2010 to about $210230/kWh last year. For EVs to be cost competitive with ICE vehicles, battery costs must fall to around $100/kWh, something that could be achieved by the middle of next decade or earlier according to J.P. Morgan Research estimates.

GLOBAL MARKET SHARE FOR PASSENGER EV LITHIUM-ION BATTERIES

“Auto producers and battery makers are very sensitive to raw material costs. Proportionally, the cost of raw materials will increase over time relative to the total cost of the battery pack. In fact, if total battery pack prices drop from $209/kWh to $100/kWh, but raw material costs stay the same, the raw materials cost would account for 56% of the price, substantially higher than today’s 27%.”

NATASHA KANEVA, HEAD OF METALS RESEARCH AND STRATEGY, J.P. MORGAN

As the composition of EV batteries change and the industry expands, the demand and price of certain commodities will be impacted. Mainly driven by China EV sales, global demand for lithium is expected to climb 20% by 2025, according to J.P. Morgan Research forecasts. Increased demand for nickel in EV batteries is also expected to push prices higher, with the battery sector on track to become the second-largest consumer of nickel after the stainless steel market by the middle of the next decade. Of the base metals, after nickel, copper follows as a close second in terms of demand growth potential. As well as being used throughout an entire electric vehicle, the metal is also used in charging ports or stations and cables. Aluminum demand will also get a substantial boost as EVs grow in popularity and vehicles get lighter.

In China, Beijing Auto Industry Corporation (BAIC), BYD and ZhiDou are among the major producers. BAIC's EC180 was China's best-selling electric car last year, which after subsidies starts at around $7,750, with a range of around 110 miles and a top speed of 62 miles per hour. General Motors recently announced plans to launch 10 heavily electrified vehicle models in China from 2021 through 2023, adding to the 10 it already had planned for 2016 through 2020.

Headquartered in California, Tesla specializes in premium BEVs, with prices for its Model S sedan and Model X SUV closer to $100,000. The automaker launched the “mass market” Model 3 last summer for around $35,000, but production delays have hampered its roll out. In Europe, the sporty BMW i8 is one of the priciest EVs on the market, starting from over $140,000. But the Nissan Leaf and Renault Zoe are proving the most popular, with 20.6% and 19.3% of the BEV market respectively, thanks to their high range (250km-300km) and low cost.

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Product description TOYOTA Auris Hybrid

Model Review (Source www.motors.co.uk)

Toyota was one of the first manufacturers to adopt hybrid powertrains in its cars – starting off with the original Prius in 1997. The continual successes of the Prius lead Toyota to choose to make the Auris hatchback into a hybrid in 2010. Since then the Yaris supermini and RAV4 crossover are also now available as a hybrid. The Japanese manufacturer is dedicated to creating “fuels of the future”, and continues to experiment with alternative powertrains for its cars. Production began in 2010 in the UK for the Auris Hybrid, and it soon became the first massproduced hybrid car to be built in Europe. Standard features included 18-inch alloy wheels with low resistance tires and other discreet styling touches to reduce the car’s drag. The second-generation of the Auris went on sale in 2013, with a hybrid version following on soon after. An estate variant - the Touring Sports - of the Auris also went on sale in the same year for the first time. It has proven a hit with taxi drivers thanks to its spacious interior and low running costs. The hybrid version of the Auris currently makes up impressive three-quarters of the hatchback’s UK sales.

Latest Model A face-lifted version of the Auris went on sale towards the end of 2015, with a fresh face and extra chrome – adopting the front end from the rest of Toyota’s range. For 2018, Toyota did make the odd change. It dropped the Active trim level in place of a new Icon model. Other trim levels also received minor equipment changes and upgrades, too.

Value For Money The Auris Hybrid does cost lightly more than the equivalent petrol or diesel versions, but the savings you will be able to gain from the hybrid will soon recoup this saving. Prices for the hybrid start at £22,955, while the estate model costs from £23,495. It’s reasonably well-equipped with standard kit including automatic air-conditioning, LED DRLs, Bluetooth, 16-inch alloy wheels and a reversing camera. Prices for the first-generation Auris Hybrid start from as little as £5,000, although you’re realistically looking at around £6,500 for an early car with around 60,000 miles. For the latest version prices start at around £9,000, with facelifted versions starting from £13,000. We saw a 2016 car for sale with 35,000 miles for £13,300 – a substantial saving off a new model. As for the estate, prices start from around £11,000 for a 2013 car with relatively low miles.

Looks And Image The Auris is not a particularly exciting car. It is mundane to look at on both the inside and outside, and isn’t exactly inspiring to drive. The Auris Hybrid is clearly based around the philosophy of comfort and reliability. It is perfectly to the city, where it’s easy to drive and quite comfortable. Unfortunately it completely lacks all driver appeal, and the extra weight for the battery pack and electric motor dulls the experience even more, as it’s not exactly a good car to drive even when fitted with a petrol or diesel engine. The steering lacks feel, too, which doesn’t inspire confidence. That said, the most spirited driving it is ever likely to encounter is when a taxi driver is behind the wheel. The CVT gearbox is frustrating to use, though, as it holds onto revs for far longer than you would want. It also makes you question how you would actually obtain the car’s fuel consumption could be met in any driving. Unfortunately, this is the only gearbox offered in the Auris Hybrid. It’s very comfortable, too, and is a smooth and relaxing car to travel in, even more so in hybrid guise.

While the Auris does feel well put together, the materials used are not pleasant or inspiring in any way, and do make the cabin feel exceptionally dull. Neat touches such as the digital clock, air vents and touchscreen do add a touch of flair, though.

Space And Practicality Against rivals such as the Volkswagen Golf and Seat Leon, the Auris is not quite as practical with less rear space and versatility. However, if you require that extra space you do have the option of the Touring Sports estate. Visibility is excellent, too, thanks to large windows, which makes parking man oeuvres pretty simple. Rear space is ample, although the flat floor due to the lack of transmission tunnel does make it handier if you frequently carry three passengers in the rear. Unlike other hybrid or electric versions of conventionally-fueled vehicles, the Auris Hybrid retains the same sized boot as the petrol and diesel versions. There are 337 liters of boot capacity in the hatch and 507 liters in the estate version. Folding the seats down increases this to 1,176 liters and 1,635 liters in the hatch and estate respectively.

However, if you were thinking of towing with the Auris Hybrid, you’ll be disappointed to find that Toyota regards the Hybrid as an unsuitable tow car.

The Auris has proven to be a very safe car, securing a five-star Euro NCAP rating. All models also come with the Toyota Safety Sense package that includes autonomous emergency braking, auto-dipping headlights, traffic-sign recognition and lane-departure warning.

Engines

Just one powertrain option is available on the Auris hybrid – a 1.8-litre petrol engine paired with an electric motor. These combine to produce 134bhp – Toyota won’t provide torque figures for its hybrids. Power is fed to the front wheels by the aforementioned CVT automatic transmission. The hatch takes 10.9 seconds to accelerate from 0-60mph, while the Touring Sports takes 11.2 seconds. Both versions have a top speed of 111mph. Because the Auris Hybrid is not a plug-in hybrid, it does not have an all-electric range, while it can’t be charged up either – this happens on the move instead.

In the Auris Hybrid’s most basic spec Toyota claims it will return 78.5mpg on the combined cycle, with CO2 emissions of 82g/km for the hatch, and 83g/km for the estate

Running Costs

While the Auris Hybrid should theoretically be cheap to run with the figures that Toyota claim, the reality is that you will not be able to obtain anywhere near these figures in normal driving. The unfortunate reality is that unless your Auris Hybrid stays in the city all the time, it probably won’t be that much cheaper to run than the 1.2-litre petrol version. Savings will be there for business users, though. The Auris Hybrid in its simplest guise is in the 17 per cent benefit-in-kind bracket, as opposed to the diesel in 23 per cent. This means that as a company-car the hybrid will save you money. Unfortunately, with the revised CO2 brackets that came into force in March last year, the Auris Hybrid is no longer exempt from road tax as it was before. Road tax for the first year is now £120 and £140 a year thereafter. All Auris Hybrid models are placed in insurance group 12, comparatively lower than the petrol version and a diesel-engine Ford Focus, too. If you choose a car with the Toyota Safety System, this drops to insurance group to 10.

Things To Look Out For

The Toyota Auris has proven to be a very reliable car, and the hybrid version is no different.

Toyota has a long reputation for the reliability of its cars, and has developed a loyal customer base because of this. This is also helped by Toyota’s five-year 100,000-mile warranty that gives you the added confidence in its cars.

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Situational analysis including Usage and attitude study

SWOT Analysis

Strength  Strong focus on research and development (R&D) leading to some of the most innovative vehicles in the world

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Strong brand loyalty in the Egyptian market.

Weakness  Lack of charging points.  Lack of after sales service. Opportunities  A custom-free importing policy.  Higher rates for petrol products.  A higher awareness of environmental impact of petrol engines. Threats  Economic recession in the Egyptian market.

Objective To create the most bold and dynamic hatchback car on the market, without compromising interior usability. Toyota has always prided itself on listening to its customers and responding to their feedback. In particular, after 20 years of hybrid leadership and more than 11 million global sales, including more than 1.5 million hybrid vehicles in Europe, the company has been keen to learn from them how it can further improve this technology and make it more attractive to more people. This experience has helped prompt Toyota to offer its core models with a choice of two hybrid electric powertrains: one providing the traditional benefits of fuel efficiency and a relaxing drive; the second building on these strengths with greater power and more dynamic driving characteristics

Strategy Toyota has decided to move to a new strategy. From now on, it will offer two hybrid powertrain options for its core models – one benefiting from the traditional virtues, like fuel efficiency and a relaxing drive, and another offering greater power and more dynamic driving characteristics. The first to receive two hybrid systems is the new

Toyota says it’s “silent, intuitive, responsive” with “low cost of ownership, no need for plug-in recharging, offering outstanding fuel economy and low CO2 emissions.” If you want more power, the Japanese brand will be happy to sell you the newly-developed 2.0liter hybrid system, which offers “an ‘energized drive’” with 180 hp (134 kW). For even more

engaging driving experience, the Auris 2.0 hybrid is equipped with steering wheel-mounted paddles.

Toyota Motor Corporation Action Plan

Toyota has decided on the following plan to build an environment to promote women’s participation in the workplace.

1. Implementation Period: From April 1, 2016 to March 31, 2018 2.Our Challenges -The number of female employees is not large enough, and the average length of service of female engineers is shorter than that of male engineers. -The proportion of women in managerial positions is low.

3.Targets -Employment rate of female graduates - Administrative: 40%; Engineering: 10%

- Number of female managers the number of women in managerial positions in 2014 to be increased three-fold by 2020, and fivefold by 2030

4. Details of Actions Action 1: Maintain a hiring rate for female graduates (Administrative: 40%; Engineering: 10%) Initiatives to continue: Carrying out the following actions to increase the female employment rate [from April 2015] Increase opportunities for applicants to meet a driver range of female managers and specialists Continue to participate in "Toyota Female Engineer Development Foundation" [from December 2014] Action 2: Provide supporting a balance between work and childcare, and create an atmosphere and environment to support an early return to work from maternity leave Initiatives to continue and expand:

・Continue and expand support for childcare [from April 2007] (Expansion of usage for “working at home” program, provision of child care facilities) ・Create a working atmosphere that supports women’s participation in the workplace [from April 2016] (Produce and distribute hand-outs for supervisors and male employees) Promote male employees’ participation in child care [from October 2016]

・Raise awareness in women, their supervisors and spouses by holding pre-maternity leave seminars [from July 2015] ・Promote usage of all-day “working at home” program and subsidy for child care cost [from April 2016]

Action 3: Develop career awareness and systematic personnel training aimed at female managerial appointment from an early stage Initiatives to continue and expand:

< Career awareness> ・Promote initiatives to enhance female awareness [from June 2015] (Support the development of female networks in administrative and engineering through roundtable discussions, social network services, and introduce role models) ・Prepare for personalized development plans that take into account the life events of each individual for women in administrative and engineering positions [from April 2009] ・Enhance programs for managerial level employees [from April 2016]

Toyota Marketing Mix (7Ps)

The 7Ps of Marketing that have Shot Toyota to the Top

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