Evaluating Risk and Opportunity

Evaluating risk and opportunity

In totality, japan is one of the biggest players in automobile industry in the world. Having an A1 rating in terms of investment outlook according to Moody's Investors Service has affirmed the Government of Japan's issuer rating is maintained at stable.

In a report made by FitchRating in October 2016, “Affirmed Japan-based Toyota Motor Corporation's (Toyota) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) and senior unsecured debt rating at 'A'. The Outlook is Stable. Fitch has also affirmed the company's Short-Term Foreign- and Local-Currency IDRs at 'F1'.”

In relation to the Toyota Lexus case study, Lexus has a high profitability potential since it is much cheaper than the other luxury cars made from the USA, China, and Europe. It gained popularity especially in the United States since it is much cheaper, knowing it’s a luxury car.[pic 1]

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In photos: shows that risk in some of the main exporter of Japanese cars like the USA, the Philippines, and other parts of Europe have a lower default risk. It also shows japan’s low risk rating.[pic 3][pic 4]

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These reports confirmed the overall high potential of Toyota Lexus not only in the USA, but also in its homeland, Japan. According to Moody's analysis in October 2014 report entitled "Default and Rating Transitions of Japanese Debts Issuers, 1990 -- 2013", For the entire period of 1990-2013, default rates among Moody's-rated Japanese issuers were relatively low. For example, the one-year default rate averaged only 0.2% for all rated issuers and 1.0% for speculative-grade issuers. Globally, the corresponding rates were higher at 1.8% and 4.6%, respectively.

Solution:

Toyota should maintain the quality and price stability of Lexus in its international market where it is well patronize without disregarding the continuous innovation of the Lexus model. To gain vast market in the local scene, Toyota should come up with marketing strategies where they will innovates the Lexus model and merged with German car manufacturers. Having the right marketing exposure that will attract Japanese car buyers to try its local luxury car will make them realize how innovative as well as price smart to choose Toyota’s Lexus.