Toyota homes in on Yaris sedan replacement

TOYOTA Australia is preparing to redouble its efforts at the budget end of the automotive spectrum, lining up a replacement for the Yaris sedan while eyeing an even cheaper sub-compact city-car to take the fight up to the likes of the Barina Spark, Nissan Micra and Suzuki Alto.

Although Australia’s number-one car company is tight-lipped on details of these vehicles, the betting is that they will be sourced from outside Japan, probably Thailand.

Thailand is also expected to replace Japan as the source of Toyota’s volume-selling Corolla small car for Australia at some point in the next generation, after the redesigned Corolla is launched in Australia in the second half of 2012.

Toyota Australia senior executive director of sales, marketing and aftermarket David Buttner told GoAuto at this week’s Camry launch that a replacement for the Yaris sedan was a certainty.

“We are progressing down that track,” he said. “We have a couple of irons in the fire, and at this juncture I can’t be definitive, but there certainly will be a replacement in the not too distant future.”

Launched in Australia in October, the new Yaris is made only in three-door and five-door hatchback variants, although Toyota dealers are continuing to sell the second-generation sedan alongside the new model, at least for now.

The combination has kicked goals in recent months, topping the light segment in November sales and pushing the market-leading Mazda2 back to second place for the month.

However, at some point the six-year-old Yaris sedan will have to make way for a fresh car to appeal for the core market comprising ‘empty-nesters’, retirees and young families, who account for about 15 per cent of all Yaris customers.

As GoAuto reported in October, a Toyota insider has suggested that work on a new light sedan based on the fresh XP130 architecture is underway within Toyota.

Mr Buttner also confirmed that Toyota Australia was on the prowl for a A-segment city-car to take a slice of the growing sub-light segment.

“We still also are looking for an entry in that sub-compact area, which is really an emerging market at the moment and really adding to the growth in those smaller cars,” he said.

All eyes will be on the 2012 New Delhi and Bangkok motor shows in January and March respectively, as global manufacturers increasingly use these venues to spring entry-level vehicles.

Last year, Toyota unveiled its Etios light sedan in India, with a suggestion that a similar vehicle would go into production in Thailand in 2012.

Toyota’s highly regarded iQ city hatchback has been ruled out for Australia due to its cost.

Melbourne-based Toyota Style Australia, which is responsible for the design work on the HiLux-based, Thai-built Toyota Fortuner SUV, is known to have been discussing other design work with its affiliate in Thailand – possibly an export version of a future light car.

Honda’s City light sedan started out as a basic car for Asia, but was progressed to the point where it became acceptable to more mature markets such as Australia, gaining obligatory safety features such as stability control and side airbags.

Meanwhile, Toyota has confirmed the all-new 11th generation Corolla will land in Australia within 12 months, representing the crescendo to a big year of Toyota new-model launches.

Next year will start with the launch of the hybrid Camry and Prius C compact sports hatch, plus the new Aurion large sedan, in the first quarter and continue with the Prius V hybrid wagon and 86 rear-drive sports coupe in the second quarter, with the facelifted RAV4 and new Corolla arriving in the second half.

Mr Buttner said the new Corolla would be sourced from Japan, at least initially, and would continue in the same sedan and five-door hatchback configurations.

“From the launch phase, it is certainly coming from Japan,” he said.

“I think that within the future, and whether it is the life of that (11th generation) car or just future models, I think we will start to see some increasing shift away from Japan, from a production base point of view.

“That is very much what our competitors are doing.

“You have to make sure your production base has a cost structure that can support offering a value for money product within the marketplace.

“So I think we will see a trend over time to sourcing from some other countries beyond Japan.”

Mr Buttner has long argued within Toyota for a cheaper source for Corolla and other low-end models such as Yaris, to match rivals who have made the switch to Thailand, where vehicles exported to Australia immediately benefit from the free-trade agreement that eliminates the five per cent import tariff.

“With each new model, we will keep pushing our case to ensure that the product comes from a country where we can get good value for money from a price point of view in the Australian market,” he said.

While Thai auto-makers – particularly the Honda operation – have been badly dented by the recent floods, Toyota Motor Co president Akio Toyoda recently reconfirmed Toyota’s commitment to expansion plans in Thailand.

Toyota’s global chief also recently flagged the potential for more small cars to be produced outside Japan, where the surging Yen has heavily impacted the profitability of exporting inexpensive cars.

Currently, Toyota Australia’s only major model from Thailand is the top-selling HiLux.

The Yaris hatchback range for Australia is unlikely to join the transition to Thailand any time soon, with the company confirming at October’s new-model launch that the new model will continue to come from Japan.

The case for cheaper production bases for Toyota is expected to become more pressing if Australia extends it free-trade agreement arrangements to South Korea – the source of cars for two of Toyota’s biggest rivals in Australia, Hyundai and Holden.

South Korea recently concluded an FTA with the United States, and Australia is said to be next on the list, with negotiations possibly only days from conclusion.

Mr Buttner said: “It would be foolhardy to say it doesn’t offer you an additional challenge. That’s part of being a competitor in the Australian marketplace.

“It is the government’s policy to pursue FTAs with a whole host of countries.

“If we see the five per cent (tariff) removed from those Korean entries, it will make them pretty keen in the marketplace, and we will just have to keep working harder to match the value-for-money offers.”