Automotive Production Levels - Toyota Motors Research Paper

Automotive Production Levels - Toyota Motors - Research Paper Example In the first quarter of financial year 2013, Toyota’s unit sales had jumped to 2,268,563 units amounting to sales revenue of 5,233,688 million yen. Consolidated sales increased by 85.7% in fiscal year 2013 compared to fiscal year 2012 and net revenues increased by 59.9%. These changes are indicative of a change in either Toyota’s price structure or the demand and supply forces in the market. Among other things, these changes can also be attributed to changes in the value of the yen and cost reduction measures taken by Toyota to stay afloat and efficient. Market price also plays a role here and can be calculated using a simple relationship between sales revenue and units sold. (Market price = Sales Revenue/Units Sold. According to the data presented, the price for Toyota’s products in the market in fiscal year 2012 based on the unit sales and sales revenue figures for that year can be calculated to be 2.59 million yen. For fiscal year 2013, this amounted to 2.31 m illion yen. The demand curve for a firm shows how much of a product the market is willing and able to pay for at the given price. The supply curve of a firm shows how much of a product the firm is willing and able to produce at the given. ... product is increased, demand tends to decrease and when the product price is decreased, demand tends to increase, hence establishing an inverse relationship between demand and price levels. Similarly, it can be seen from this analysis, that the aggregate market price for Toyota’s products was decreased in fiscal year 2013 which resulted in an increase in sales which depicts an increase in the demand for Toyota in the market. In the same vein, when the supply of a product is increased, its price decreases and if the supply levels in the market are decreased, the product’s price in the market increases. The equilibrium point thus keeps shifting with changes in demand and supply due to different market factors. Also relevant is the concept of spatial equilibrium (Nagurney, 2002) which speaks about how supply and demand prices result in trade flows. The figure below illustrates the aggregate demand and supply schedule for FY 2012 and 2013. Price (million Yen) 2.59(2012) 2.3 1(2013) 1,221,374 2,268,563 Quantity (units) Demand FY 2012 Supply FY 2012 Demand FY 2013 Supply FY 2013 The world economy has been going through rough times and its basic structure has been forever changed since the financial crisis of 2007-2008. Market trends have also significantly changed since then even though the market has recently picked up for the better. Toyota’s performance, measured by its sales, production, revenue and cost figures etc declined steadily in the fiscal years 2011 and 2012, however it increased its performance dramatically in fiscal year 2013 and picked up fast pace to increase its sales, production and profit levels and overall revenue levels. It also managed to decrease its production cost and reduce market price to boost its demand in the market. These maneuvers paid