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Toyota Tacoma such as 3917 TRD Pro edition leads compact truck sector but Toyota lags in fullsize trucks and SUVs
<p><strong style="font-size: 12.8px;">Toyota Tacoma, such as &#39;17 TRD Pro edition, leads compact truck sector, but Toyota lags in fullsize trucks and SUVs.</strong></p>

Trucks Are Cool, But Nothing Wrong With Cars, Toyota Says

While other automakers are pocketing big profits on fullsize pickups and large SUVs, Toyota&rsquo;s lineup skews toward cars and smaller CUVs with softer margins. Jim Lentz says the brand will retain its car-centric portfolio.

LAS VEGAS – Toyota’s top North American executives were decidedly buoyant heading in to Sunday’s meeting with retailers at the National Automobile Dealers Assn. convention here: The new Camry is a hit, the RAV4 is No.1 in its segment even before a new one arrives and the pipeline is full of other new products soon to reach showrooms.

But skeptical dealers may have a slightly different perspective. While other automakers are pocketing big profits on fullsize pickups and large SUVs, Toyota’s lineup skews more heavily toward cars and smaller CUVs with softer margins.

Jim Lentz, CEO of Toyota Motor North America, says he understands why Toyota retailers may want more trucks, but he says the brand will retain its car-centric portfolio.

“Will we ever be a real competitor to Ford and Chevy on fullsize pickups? We’ll never have that kind of volume,” Lentz tells journalists at a Sunday roundtable before the dealer meeting.

“It’s unlikely we will go beyond half-ton trucks. We won’t get into three-quarter and one-ton trucks,” he says. “I will never sell 700,000 fullsize trucks.”

The Tundra fullsize pickup gets better with each new generation, but it still isn’t catching up in the sales race against the Ford F-150, Chevrolet Silverado, GMC Sierra and Ram 1500. And transaction prices in the segment are up significantly.

But Lentz says Toyota isn’t raising the surrender flag. The Tacoma is No.1 among compact pickup trucks, finishing 2017 with 198,124 deliveries, vastly outselling Chevrolet Colorado and GMC Canyon combined, according to Wards Intelligence.

Among other light trucks, the RAV4, Lexus RX CUV and Lexus GX midsize SUV are leading their respective segments, but that leaves a lot of other profitable sectors in which Toyota or Lexus are non-factors.

Since moving Toyota’s North American headquarters to Plano, TX, Lentz says he’s thrilled to see lots of well-equipped Tundra 1794 Edition trucks, but he realizes the automaker needs to emphasize its market “sweet” spots, such as Tacoma.

Toyota had been assembling Tacoma pickups only at its plant in San Antonio, but the automaker recently added capacity for an additional 60,000 Tacomas annually in Tijuana, Mexico, freeing up capacity for more Tundras and Sequoias in San Antonio.

“Despite that, we still don’t have enough supply of trucks,” Lentz says.

Through February, 68% of the vehicles Toyota sold in the U.S. were trucks or utility vehicles, in line with the industry at large, according to Wards Intelligence. As recently as six years ago, the split between cars and trucks was evenly split, Toyota executives say.

But as CUVs, SUVs and trucks continue to dominate, some analysts suggest they could make up more than 80% of the U.S. sales mix.

“I will never sell 700,000 fullsize trucks,” Lentz says.

“I don’t believe that,” Lentz says flatly. “If you look at the last six months in prior years, you’ve seen movement of three to four percentage points between car and light truck, but it’s been almost flat now for the last 90 days.” For that reason, he expects light trucks and utility vehicles to make up about 70% of U.S. sales for the foreseeable future.

“Our forecast doesn’t indicate (the mix) going to 17% car,” says Bob Carter, executive vice president-sales at Toyota Motor North America. He says trucks and utility vehicles have gained ground because “there really haven’t been any truly innovative sedans introduced in the market since about 2014.”

Now, in addition to the all-new Camry and Honda Accord, Nissan will launch a redesigned Altima midsize sedan, and upgrades are on tap for the Ford Fusion, Chevy Malibu, Mazda6 and Volkswagen Passat.

Elsewhere in the Toyota car portfolio, an all-new Avalon fullsize sedan arrives in May, followed by a hatchback Corolla. So Carter is bullish on Toyota’s prospects in the car segment, with the all-new Camry leading the way.

“If the dealers at our meeting ask for any particular vehicles, I bet Camry will be at the top of the list,” he says. The Los Angeles region, for instance, is clamoring for more Camrys.

In addition, Toyota underestimated V-6 demand with the midsize sedan. Early in the launch, 8% of Camry buyers are opting for well-equipped models with the 3.5L V-6. An equal percentage is ordering the Camry Hybrid (a 2018 Wards 10 Best Engines winner), while the vast majority are choosing the base 2.5L naturally aspirated 4-cyl.

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