Responding to media questions during his company’s quarterly press briefing held recently, Mr. Kunle Ade-Ojo, Managing Director of Toyota Nigeria Limited(TNL) left no journalist present in doubt that TNL has what it takes to excel in a highly competitive business environment.
Holding nothing back, he revealed various strategies that have assisted Toyota brand to consistently maintain a significant market share in the nation’s automotive sector.
Q: Despite the nation’s harsh economic environment in the past one year, Toyota still managed to control a sizeable share of the nation’s automobile market. What is your magic?
Ade-Ojo: It is not a case of magic. Like I mentioned in a recent interview, we adopted risk management strategy, which is a combination of finance management, cost management and prioritization of the vehicles we bring in.
Because of limited fund, we cannot afford to market all products, but focus only on the fast moving ones. In addition to that, we focused on after-sales service, because we realized the importance of maintaining our loyal customers, for it is easy to keep old customers than it is to gain new ones.
Aside the foregoing, we recognize the importance of ensuring our sustainability, which is why we manage our relationship with our banks to ensure that we get the best rate as much as possible.
For instance, when you look at 2015, we were in a worse of position financially. But we recovered by doing all necessary things that needed to be done. Our cash-flow management became much better. We did a lot of cost cutting. We centralized certain activities within the organization.
We identified areas where we incurred costs, acted upon them and reduced up to 60% of some of those costs. We managed to streamline all our operations.
Also in the midst of reduction in dollar available from the CBN, we asked ourselves: ‘Does it make sense to try and bring in all our models?’
Even though there is a reduction in sales and performance of the economy, we identified our areas of strength.
Having done that, instead of being jack of all trade, we decided to focus our energy on those products that we know customers would still pay for. By so doing, we were able to turn our business around.
Instead of doing over 20 units, we went down to just about 10 vehicles, among which we identified 3 or 4 that are doing very well. In that case, it becomes a matter of about 20% yielding 80% of your revenue.
The situation can be likened to Nigeria. For example, at the moment, the nation has limited fund. And, for now, our major strength is oil. Whether we like it or not, oil still generates about 80% to 90% of the nation’s foreign exchange. So all that needs to be done in a difficult economic period is to identify which area can minimize cost and maximize efficiency of that products that gives you the best revenue; while other products would just be there as supplements.
Despite putting the foregoing in place, we had to also create a change of mindset with our staff, ensuring that everybody was on board, putting all necessary things in place for us to survive.
In the course of these, we also focused on after-sales service. We try and establish trust and better deals with our banks. With our conduct, we ensure better leverage with them.
So all of these helped us to survive and come up with the kind of performance that we recorded last year.”
In which segment of the market has TNL recorded the highest growth?
Ade-Ojo: We recorded more sales in commercial vehicles segment. In that segment, we had at least 50% or more. Our market share in the passenger car segment has been quite lower, about 15to 20%.
But it is still astounding how your organization managed to outdo competitors, even in the commercial vehicles segment, despite the fact that TNL has not fully taken advantage of the incentives available to local auto assemblers. How is that possible?
Ade-Ojo: To survive under a tough business environment is not necessarily about whether or not you bring in kits to assemble vehicles in the country.
It goes beyond that. Some of our competitors probably did that and still made losses last year. If you don’t have all necessary things in place to prevent and minimize your loss, you would be in trouble. When things are tough, when the economy is bad, priority should be placed on how you are going to survive, focussing more on what helps you to survive.
Our focus, therefore, has been to weather the storm till things calm down and stabilize, putting necessary things in place, in preparation for the when things begin to calm down.
For any organization, a difficult economic period could be likened to a ship in a nasty storm. Normally, movement a ship is normally slower in a storm. But if it survives the storm and enters a calm state, its propelling speed would be significant. Same goes for a business establishment.
So that is what we are saying. We just want to weather the storm, survive by all possible legal means. And when things calm down, we want to be able to accelerate ourselves and further differentiate ourselves from the competition.
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