Thai take-away on the menu for Yaris

TOYOTA Australia has confirmed that it is investigating changing the sourcing of its next Yaris light car, with Thailand considered as the leading contender for the all-new third-generation model due in about 2010.

Toyota Australia chairman emeritus John Conomos told GoAuto at the 2007 Tokyo Motor Show this week that Thailand is shaping up as the ideal Yaris production location.

“It’s been looked at. Thailand is a great source for reliable world-class product,” Mr Conomos revealed.

Currently the Yaris – Australia’s top-selling light car by a large margin, and in a segment that is the fastest growing this year – is built in Japan, which has provided our tiniest Toyotas since the Starlet arrived here in 1996, followed by the Echo in 1999 and today’s Yaris in 2005.

With the Thai government lately focussing on winning more light- and small-car production contracts – after its successful campaign in luring light-truck manufacturers over the last decade – Toyota Australia management understands that the pricing edge that comes with choosing a lower-cost production base can be extremely lucrative.

Left: Toyota Australia's John Conomos.

Since arch-rival Honda changed its Jazz light-car sourcing from Japan to Thailand in early 2006, sales have rocketed on the back of the lower entry price and higher standard features content the move brought with it.

This year Jazz is running at around 980 per month, against 786 last year and 660 in 2005. And this is in spite of the fact that the Honda – released in 2002 – is now narrowly the second-oldest in its class.

Ford Australia has already announced that its next Fiesta light car will follow the Honda by coming out of Thailand, as part of a 50:50 deal it has with its Japanese partner Mazda.

Mazda will also produce the closely related ‘2’ light car at the same Thai facility, although Mazda Australia has yet to confirm any plans to switch importing from its current Japan source.

Like the Jazz, both currently compete head-on with the Yaris, but will gain a decisive price advantage if Toyota does not act in time.

“With a Free Trade Agreement (FTA), it is inevitable that we will have to examine (Thailand) carefully,” Mr Conomos admitted.

HiLux commercial vehicle aside, Toyota Australia has not been able to exploit the FTA potential.

“For the moment, our passenger car products from Thailand are either built here, like Camry, or are not suitable for this market,” Mr Conomos said.

However, the Toyota Australia veteran did point out that Thailand’s inability in the past to provide vehicles with adequate levels of equipment and/or technological sophistication may yet rule it out from providing us with the next Yaris.

“We will require vehicles with high-specification requirements, as opposed to what Thailand builds, which is generally for emerging markets.”

Nevertheless, it is clear that high sourcing costs mean that the days of the Japanese-built Yaris are numbered as far as Australia is concerned.

“Toyota will have to naturally consider all options,” said Mr Conomos. “So for the next-generation products, we definitely will.”

Furthermore, the Yaris is not the only model Toyota might be considering from a lower production-cost country.

“We are looking carefully at what passenger-car products could be sourced from Thailand – and others,” said Mr Conomos.