Toyota's ultimate target

THE undisputed and indomitable market leader of 2007, Toyota Australia has made a bullish prediction that it will sell a quarter of a million vehicles in 2008 –an increase of six per cent that would see one in every four new-car purchases go to the dominant Japanese brand.

Toyota’s senior executive director of sales and marketing David Buttner told GoAuto last week that the company expected to grow sales from an anticipated 235,000 units in 2007 to 250,000 in 2008 by convincing existing customers to stay in the fold, and by “conquesting” customers from other car companies.

This ambitious goal is against a backdrop – as sketched by Toyota, and also voiced last week by Holden, which does not expect to increase overall sales next year – of an Australia car market unchanged in volume from the all-time record of just over one million sales this year.

According to Mr Buttner, the path to business growth is not new. What is new, however, is how Toyota smoothes that path. “When you look at our growth over the last two years, there have been two abundantly evident facts: without a doubt we have grown by maintaining and expanding our existing loyal customer base, but number two, by conquesting customers from other brands,” he said. “In a static marketplace, they are still the two only avenues available to us. Therefore, we have to dig deeply every day to ensure we are exemplary in every aspect of this business.” Given its recent successes, Toyota can afford to be so clear and confident about its ambitions. In October, it outsold its nearest competitors – Holden and Ford – combined, and although it failed to repeat the feat last month, the brand passed 195,000 sales for a 22.4 per cent share year-to-date. This is more than 71,000 units above its nearest competitor Holden, on 14.1 per cent. The next nearest rival is Ford, which sits 105,000 units behind Toyota, with 10.3 per cent of the market. Mr Buttner would not be drawn on which competitors Toyota would target to glean an additional 15,000 sales in 2008, only saying “we have always many targets in mind when talking about conquest sales”.

Left: Toyota TRD Hilux and Holden VE Sportswagon.

“The fact we have 17 product lines, our target always is to strive for number one in that segment,” he said. Toyota has a well-stocked larder of fresh models with which to attract new customers. The company has renewed most of its product lines in the past two years, including Camry, Aurion, Corolla, Yaris, RAV4, Kluger, LandCruiser 70 Series and LandCruiser 200 Series. Only Prado continues as an ‘old’ model, on sale since 2003. With no all-new vehicles expected in 2008, Toyota will direct its considerable resources into model derivatives and market niches, such as the V6-powered RAV4 introduced last week – a vehicle Toyota expects will build sales of the compact SUV by 20 per cent.

Sports derivatives, such as the TRD HiLux and Yaris Sportivo, will also surface next year.

While Toyota is not generally known as a manufacturer of enthusiasts’ cars, Mr Buttner said a key part of the growth plan was to engender enthusiasm for the brand – a goal Toyota management has set many times over the years.

He said Toyota had to “create passionate advocates for the brand, who will talk about the Toyota experience they’ve had”.

This relates back to customer satisfaction in general, which Mr Buttner said was a primary focus. “Some years ago, we found a trend that wasn’t very healthy, and that was as volume was expanding, our customer satisfaction was going the other way,” he said. “So in 2003 we spend a lot of time doing incremental research over and above what was already in the marketplace to really understand what really were the drivers of customer satisfaction, therefore giving us a much deeper understanding of where we need to focus this business (and) where we need to focus our resources. I can’t say every Toyota experience is an exemplary one, but that certainly is our goal”.

Mr Buttner said Toyota well understood that the point of sale is where sales wars are won or lost, and that it has invested heavily in keeping a close relationship with its retail network. “Last year we started what we called our retail development division, which is particularly focused on working with our dealer network to develop the capability and capacity to drive us forward in a volume sense and also in customer satisfaction.” In stark contrast to Toyota, Holden is not anticipating an overall sales increase in 2008. GM Holden chairman and managing director Chris Gubbey said last week there would be a reduction in VE Commodore sales volume in at least the first quarter of next year, owing to a gap in production between the soon-to-be-discontinued VZ station wagon and the all-new VE Sportwagon. The latter is due for release in the first half of 2008.

“In the first few months of next year there’s going to be a slight drop-off of VE volume, but that’s really due to the fact that we normally sell around 1000 wagons a month,” Mr Gubbey said. “When you see that happen, you’ll know the reason why – so don’t start writing obituaries for the Commodore based on the fact that it’s fallen off in the first few months.

“Overall volume (increasing) might be a little bit dodgy. I think once we get the Sportwagon introduced, when you look at a monthly volume basis, then yes … we’re expecting volume returns.” Asked whether Holden would go after Toyota for market leadership, Mr Gubbey said: “The straight answer to that: being sustainable is much more important. Staying here as part of Australia and Australia and Australia’s manufacturing base, being a local producer in Australia and a company that has a healthy future is much more important to us than just chasing share. “My role is to help Australia build a sustainable home-based automotive industry – sustainability being the important factor – and we’ve made some decisions this year, and we’ll probably stick to some of those decisions, that actually have a direct effect on eroding market share. That is, coming out of certain parts of the market that is not sustainable and profitable longer-term.

“It’s tended to be more set lines and selling vehicles as opposed to particular segments. So with the Australian Adventra (for example), we’ve made a conscious decision we’re not going to play there anymore.” Mr Gubbey said Holden has forecast the Australian new-vehicle market will be around the million-unit mark “but I don’t think we’re bold enough to say it will be another record year”.

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