Market Insight: Toyota primes hybrid range

THE art of selling is a simple process that can be ridiculously complex. Outwardly, it matches consumers with products or services, usually with a person in the middle to facilitate the action.

Much of it is self-policing – no product equals no sales; too expensive equals low sales; low price equals high demand; and the Goldilocks moment when supply and demand harmonise to the delight of the salesperson.

So why did Toyota Australia, with its Yaris hatch having a 28 per cent stranglehold on the light-car market in 2020, suddenly raise the price of the car by $9500 and see sales plummet by 56 per cent (year-to-date February 2021) and its market share slump to 12 per cent and a third-place position on the sales ladder?

The price hike applied to the new-generation Yaris launched in August 2020 represented the first time that Toyota had no new-car offerings in the sub-$20,000 segment.

The previous generation could be bought for as little as $15,990 including on-road costs. In its new-gen guise, it entered at $25,500 driveaway, a jump of a whopping $9500.

In October 2020, the new model found only 218 buyers compared with 863 sales made in the previous year’s corresponding month.

The flagging sales of hatchbacks is reflected in Yaris sales since 2009, when the model hovered around 20,000 units a year in a market that adored the small car.

Toyota Australia sales and marketing boss Sean Hanley sat down with GoAuto and explained that while on the face of it, there is an image that Toyota has abandoned the Yaris and the sub-$20,000 segment, in reality it is a segment which was showing little future value.

“When we made that decision (to raise the price), we looked very much at the hatch segment and at the trends of that segment that were showing a decline,” he said.

“If you look at the hatch market now, it is actually in reverse. We had to adjust our products to suit the market.”

The Yaris predicament is against a backdrop of Toyota Australia’s marginal fall in annual sales in 2019 over 2020 of about 1000 units – a good result given COVID’s multitude of hindrances all along the journey from car production to delivery.

The 2021 data will shape up to be even better, with Mr Hanley predicting 200,000-plus sales and a 20-plus per cent market share.

“But we’re not taking anything for granted,” he told GoAuto.

“Right now, we're very pleased with our momentum but we're very respectful of the fact that we operate in Australia which is a very, very competitive market.

“While we don't have any weak areas of the business, right now, we understand that because we operate in one of the most competitive markets in the world, we have to continually monitor our sales performance and continue to challenge ourselves to be better in the market.

“Right now our product and our network is enabling us to do well – and we're better than most so in this regard – and to stay alert, respectful, and continue to strive.”

The Yaris factor reflects how closely Toyota watches the market. Though the hatchback’s market share has slumped – driven by the price hike but also as competition increases and buyers gravitate away from the body style genre – the Yaris nameplate is back to increasing its popularity.

Mr Hanley said the addition of the Yaris Cross – a baby SUV-esque model that fills a gap beneath the RAV4 and C-HR – has lifted sales of the Yaris name and was aided also by the launch of a hybrid version of the Cross.

He believes the SUV version of the Yaris has great promise in a market that shows intense bias to the faux off-road wagon design of the SUV styling. He also sees the word ‘Hybrid’ as being an increasingly important lure.

“In 2020 we sold 54,000 hybrids in Australia which is equivalent to 26.3 per cent of our total sales,” he said.

“Australians are looking for practical alternatives and right now we see hybrid as a very much affordable alternative that delivers a lot of benefits.

“More than 50 per cent of the Camrys, RAV4s and Corollas we sold last year were hybrids. That uptake can do the same for Yaris.”

Mr Hanley, who was the key driver behind the launch of the Prius in Australia in 2001, said Toyota did not see hybrid as a transitional technology “rather it is simply one technology.”

“We see it being around for a long time and, quite frankly I've said it before, Australians are gravitating to hybrid vehicles and the reason they're doing it is because it's affordable and it’s practical.

“And there’s no doubt it has made an impact as a way of reducing fuel consumption.”