Toyota still wants a quarter of the market

TOYOTA will not retreat from its long-held ambition of grabbing 25 per cent of the Australian new-vehicle market, despite dropping market share over the past two years and conceding it should finish 2010 at a five-year low of only 20.5 per cent.

After failing this year to reach its formidable quarter-share target, which former Toyota Australia boss John Conomos first set in 2004, the long-time market leader now expects to reach its target by 2012 on the back of a wave of new models.

Having broken through the 200,000 sales barrier for the first time in 2004, a 25 per cent share seemed inevitable when Toyota reached 23.6 per cent in 2008 – before the GFC took the wind out of its sail.

However, speaking to GoAuto in Canberra last weekend, Toyota Australia senior executive director of sales and marketing David Buttner said he believed a 25 per cent share was possible in 2012.

“Market share is important to us,” Mr Buttner told us.

“I’d like to think 25 per cent is still achievable - I reckon in 2012, with the new models we have coming. The first year of new models coming in is worth two, three, four per cent, if you’ve got enough of them coming.

“Our biggest year was 2007 when we had seven new-generation vehicles come in and now we’re getting toward the end of the model cycle of those vehicles.” Toyota’s new-model assault will begin next year with a major facelift of the HiLux, but will hit top gear in the third quarter of 2011 with the introduction of all-new versions of two of its volume-selling staples – the Camry mid-sizer and Yaris light-car – followed in 2012 by the new-generation Aurion V6, Camry Hybrid and Corolla small car.

The FJ Cruiser, which was shown in Canberra at a Toyota 4x4 drive event along with the most recent changes to Kluger and HiLux, will be the next new vehicle to arrive for Toyota, in March 2011.

However, like the Fortuna SUV and FT-86 coupe due in 2013, it is a niche model that will not drive huge sales increases.

Mr Buttner said he expects Toyota to finish 2010 strongly, with around 215,000 sales expected from a total Australian market of 1,015,000 new vehicles, lifting Toyota’s share from its current level of 20.2 per cent year-to-date to about 20.5 per cent (down from 21.2 per cent last year).

“In the last two months we’ve had pretty strong rental deliveries, so we expect our share to be up to 23-24 per cent over the last few months and hopefully we’ll come out of the year with about 20.5 per cent,” he said.

Mr Buttner forecast further growth for Toyota in 2011 and a total market of around 1,050,000, with the market plateauing around the same figure in 2012.

Camry still dominates the four-cylinder medium car segment, commanding 38.1 per cent of the category while its nearest rival, the Mazda6, accounts for only 12.7 per cent.

“When you look at the share growth this year with Camry and Camry Hybrid, I think the market has gone up 10.9 and we’ve gone up 13.3 in the medium four segment, so we’ve grown above the market,” Mr Buttner said.

“The next-generation Camry is a good-looking car and well-specced, so we’re confident that it’s still a really good car that is still stylish. We’ll start building the engine locally from the end of 2011.”

Toyota’s all-new 2.5-litre VVTi four-cylinder engine will power both the conventional and hybrid versions of the redesigned Camry, and its local production is significant as it underpins the future of Toyota’s Altona engine plant and makes Camry more profitable than its Aurion sibling with an imported V6.

Aurion has not had the impact Toyota had hoped for in the dwindling large-car market against the Holden Commodore and Ford Falcon, but Mr Buttner confirmed the company will continue with the model for the next generation – but that the version after that might not be sold here, at least as an Aurion.

“Next-generation Aurion will continue with what we have now, as two different cars (Aurion and Camry), but for the next generation plus one we’ll be giving some consideration to what we’ll do,” he said.

“Even though the medium four-cylinder market has grown and the large six market has dropped off quite a bit, we think we’re okay for next-generation Aurion because the main thing for us is maintaining volume through the plants.”

Left, from top: Toyota FJ Cruiser, Auris/Corolla HSD hybrid, current Fortuna, FT-86G concept.More than 60 per cent of the total production of Camry and Aurion models from the Altona plant is exported to overseas markets and that is expected to account for more than 80,000 vehicles in 2010. Though down from the record 101,668 exports in 2008, exports remain vital for Toyota Australia.

“We export to the Middle East in US dollars, so at the moment it’s not as good as it could be, but we’ve managed fluctuating rates for 50 years and we’ll just have to keep doing it,” he said.

Mr Buttner is confident the new Yaris hatch will help push Toyota sales in 2012 (when Corolla is also due for replacement).

He points out the Yaris is nearing the end of its model cycle while the competition is at the peak of theirs, but this ignores the fact that the vehicle beating Yaris is Hyundai’s seven-year-old Getz, which ceases production in December.

“Yaris and Corolla were dominant market leaders for some time, but when you look at the growth of competitors – and the quality of those competitors has grown significantly in the last two to three years – now Yaris and Corolla are number two and they’ve never been there before,” he said.

“On Yaris and Corolla we lost competitiveness is terms of safety (and) our pricing from a spec-adjusted point of view had deteriorated from the position it was when we launched those cars.

“With the spec up and price down adjustment we did at the start of November, we’ve gone for a full complement of airbags across all those vehicles with five-star safety, except for entry-level Yaris YR, and we’ve rolled the price back to much more closely align those vehicles spec-adjusted to what they were when we launched them.”

Toyota recently introduced a 2.9 per cent finance deal on Yaris through its in-house finance company, Toyota Finance, and Mr Buttner said that customer enquiry and conversion rates were running ahead of forecast after the first two weeks of the offer.

“It’s always an interesting time for a franchise when you’re launching shiny new metal every second month, but when you get to where we are now and a lot of your competitors are launching new models, you’ve got to make sure you keep dealer confidence high and do some other things to keep stimulating the models.

“This is why we’ve launched a lot of special editions, a few facelifts are on the way and a couple of repositions, just to keep the interest in the marketplace even though we don’t have the shiny new product.”

Another model to benefit from such activity is the HiLux ute. Although still dominant in its segment, Toyota wants to lift HiLux sales to private buyers and has therefore given the top-spec SR5 diesel double-cab 4x4 model a new safety equipment package as standard while also adding safety options to lower-spec variants.

This will see HiLux through to a “major facelift” in 2011 that will include mechanical and styling changes, ahead of an all-new model that is still two to three years away.

“The 4x2 and 4x4 ute segment is super-competitive and, while we’re holding our own, our biggest issue has been the private buyer,” Mr Buttner said.

“We’ve introduced a couple of programs there with 17-inch wheels, ABS and airbags with no additional cost, and we’ve put some special offers out there for primary producers to try and hold our share there.”

Still on SUVs, another Toyota insider suggested that they are looking at the Fortuna wagon, which is made in Thailand on the HiLux platform and could arrive in Australia around the same time as the new HiLux in late 2012 or 2013.

This would give Toyota a third player in the booming mid-size SUV segment where similar ute-based vehicles from Ford, Isuzu and Holden are expected to join those already there from Mitsubishi (Challenger) and Nissan (Pathfinder).

Also on the product plan for early 2013 is the FT-86 sportscar being designed as part of a joint-venture with Subaru. Mr Buttner said the version that appeared at the Sydney motor show last month, with a turbocharged 2.0-litre engine and six-speed gearbox “is getting close to what it will look like”.

Mr Buttner hinted that a small hybrid could arrive in the next 18 months, but would not disclose details. This could be the Corolla Hybrid, which is already available in other markets and could join the next-generation Camry Hybrid that will be launched in mid-2012.

With Honda’s Insight available for less than $30,000, the high-spec Prius will come under the microscope for repositioning.

“With the launch of Hybrid Camry, Prius volume has dropped significantly,” Mr Buttner explained. “We’re about to launch the Lexus CT200h, so we have to look very closely at the price points of the three hybrids and we’re in the process of doing that.

“Prius sales have dropped, but we expected that as our prime focus is Hybrid Camry because that’s a locally produced car and that’s volume.”

Could Prius disappear from Australia if Hybrid Camry sales were strong enough? “We’ve discussed that and we’d like to leave it in the model range. What we have to look at is where it is positioned because currently its pricing for the bells-and-whistles model is a bit out of line with what’s happening in the marketplace,” he said.

Mr Buttner also said he would like the Hybrid Kluger to bolster its performance in the medium SUV segment, but it is not yet produced in right-hand drive.

Toyota Australia is currently running five plug-in versions of the Prius – part of a 500-car global test program ahead of series production – but, while the Toyota US has recently announced it will go on sale there during 2011, Mr Buttner said it will be post-2012 before we see it here.

“Toyota (Japan) has a lot of eggs in the hybrid basket and still believes it is the way forward.

“Looking ahead to 2015, they want to have a hybrid in every model. The first one million hybrids took 10 years to sell while the second million took just two years, so it’s gaining momentum but hasn’t got that mass appeal yet.

“People are looking at Hybrid Camry and saying, ‘For a diesel you will pay (an) $1800 to $2000 premium, and you’re asking me to pay $3000 or $4000?’ People still look at the financial equation only, not the combination of financial and environmental benefits, and the financial gains win-over the private buyer.”

He also added that there has been no talk of a plug-in Hybrid Camry for Australia, while the all-electric version of the RAV4, co-developed with electric sportscar-maker Tesla and about to be unveiled at this week’s Los Angeles motor show, is not being talked about for this market.

Mr Buttner concedes that the regular RAV4 compact SUV – another Toyota model that was once the leader in its segment – has been overtaken by its competition.

However, he said that sales have recovered thanks to recent revisions to the range, including the introduction of a 4x2 model priced below $30,000 that now accounts for about 60 per cent of RAV4 sales.

“The reason we launched a 4x2 was to get a lower entry price and bring the price down, and so far it’s worked for us and RAV has kicked back in.”

The RAV4 is another model drawing toward the end of its lifecycle in 2012-13, so the arrival of an all-new model should further assist Toyota’s push for a quarter-share of the Australian market.

What's coming from Toyota:FJ Cruiser – March 2011
HiLux facelift - Mid-2011
New Camry - Third quarter 2011
New Yaris - Third quarter 2011
New Aurion - First quarter 2012
Small hybrid - 2012
Hybrid Camry - Mid-2012
New HiLux - 2013
Fortuna SUV - 2013
FT-86 coupe - 2013
New RAV4 - 2013