But just wait. Like a worker who strives to continuously improve processes and quality onMotor Corp.’s famously efficient production lines, the world’s third largest vehicle producer is moving meticulously down a checklist to fix every glitch and patch every hole in its U.S. product lineup.
In the next several years, Jim Press, executive vice president and chief operating officer of Toyota Motor Sales USA, promises Toyota will have big pickups powered by V-8 engines with stump-pulling torque, a new generation of sexy, highly-styled Lexus luxury cars, plus a growing number of fuel-efficient hybrid vehicles – in addition to its hugely successful lineup of mainstream sedans and light trucks. (See related story: Full Speed Ahead for Lexus )
Toyota’s Jim Press with pickup truck concept.
Check, check and check.
In an interview with Ward’s, Press insists that displacing the (See related story: Toyota Says Talk of Seventh North American Plant Premature)Group as one of the U.S. “Big Three” is not a goal, even though the auto maker continues to bulk up sales and production in North America. Investment in the region, including Canada and Mexico, will exceed $16.7 billion by 2006, and the auto maker already is talking about the future need for a seventh North American vehicle assembly plant.
However, Toyota certainly is interested in competing in virtually every vehicle segment in North America, from small economy cars with its new youth-oriented Scion brand to the highly profitable fullsize pickup market, to supercars.
To do this, Press changes hats with aplomb, switching from a hybrid-promoting environmentalist to a red-meat-eating car guy.
How big is the new V-8 Toyota will build in Alabama for the new pickup, due out in fall 2006?
“Real, real big. It’s not a girlie man engine,” Press says with a laugh.
He can afford to be flippant. Toyota is coming off a strong year in North America, and Press expects more growth in 2005 – although not as strong as this year.
While most expect industry sales as a whole to be up around 1% in 2004 vs. last year, Press says Toyota will be up around 8%. “And our share will be up a little bit because of that.”
He expects 2005 industry sales to creep up perhaps another 100,000 units, and Toyota’s sales to increase 2% to 2.5%.
“This year we benefited from the rollout of Scion,” Press says. Next year we’ll get Scion nationally for the full year. Plus we have a number of new models coming out next year. We’ve got a new Tacoma, a new Avalon, (Lexus) RX 400h and hybrid Highlander.
“Sequoia and Tundra have new engines and a major freshening. Camry has a major upgrade in styling and interior, so we’ll probably see continued growth but at a slower rate than this year.”
Even though it will not be out for almost two years, the redesigned Tundra pickup is one of the auto maker’s most anticipated – and feared – products.
The current Tundra is not quite big or powerful enough to compete head to head with the likes of theF-150 or Chevrolet Silverado, so Toyota is building a bigger, better one in a greenfield factory in San Antonio, TX.
Toshiaki Taguchi, former president of Toyota North America Inc., told Ward’s last year the fullsize pickup sector offers the greatest growth potential for Toyota in the U.S., and it hoped to have 10% of the segment by 2007 or 2008.
Press says Toyota currently has about 4.3% of the fullsize pickup market, vs. 12% overall, and that certainly leaves room for growth. But he says there now is no specific market-share target, partly because the entire segment continues to grow. “As the ocean rises, you known all the boats can rise with it,” he says diplomatically.
Despite all its successes in 2004, Toyota has had setbacks as well. Earlier this year it announced it would kill its MR2 Spyder and Celica sports cars in the U.S. after the ’05 model year because of dwindling sales. Another embarrassing problem: below-par customer satisfaction at Toyota dealerships while its Lexus dealers are the industry’s best.
And despite being the top-selling U.S. luxury brand, Lexus continues to be criticized for lacking the panache of its European competitors and for failing to offer all-wheel drive, an option now available or standard for many of its competitors.
But once again, Toyota is checking off the boxes.
Right now at least, the Scion tC coupe is succeeding and taking away some of the sting from the problems with the MR2 and Celica. Toyota also has launched a major initiative to improve its dealer customer satisfaction, including a new survey system, a new covenant that improves advertising practices and increased field support.
Press blames some of the problems on Toyota’s fast growth.
“We’re really taxing the facilities, and we’re taxing the number of people that work in the dealerships and we’re also taxing the training and development of our people,” he says. “We also haven’t given the dealers the tools they need to monitor their processes and monitor their people and achieve the kinds of levels of satisfaction that we all want. In May of this year we launched a whole new survey system that enlightens the dealers and allows them to identify in their processes and their people where their issues are, where their problems are.”
The goal, Press says, is to have Toyota customers as satisfied with their dealership experience as they are with the product.
The issues with Lexus also are being addressed next year.
This January in Detroit, Lexus is expected to show off the sporty new GS, its first AWD car (with more to follow) and the beginning of a new generation of emotionally styled models. A truly show-stopping ultra-luxury coupe or sedan supercar concept also will debut in Detroit next month, although Press will not be specific.
“We’re rejuvenating Lexus,” Press says. “We think the first phase of Lexus was very successful in establishing the brand, based on quality, on refinement, on comfort, on performance. The LS outperforms the 7-Series () and the S-Class (Mercedes) in many ways, but viscerally, emotionally, it’s not as engaging. So the component we’re adding to Lexus now is the emotional side of the styling, design, unexpected comfort and convenience and outlandish performance,” he says.
“It isn’t just that by looking at the numbers and there’s a couple tenths here and there, it will be a clear leader in many areas of performance,” he adds.
But all this emphasis on power and performance is not distracting Toyota from another one of its major initiatives: hybrid powertrains. (See related story: Toyota’s Methodical Hybrid Strategy)
The popularity of the Prius hybrid sedan stunned even its biggest proponents. Earlier this year, Toyota announced it was doubling production to 100,000 units annually to keep up with demand. In 2005 it will add the hybrid-powered Lexus RX 400h and Toyota Highlander cross/utility vehicles to its lineup. Toyota has stated it wants to sell 300,000 hybrids worldwide by mid-decade.
How many more are in the pipeline? “We haven’t finalized a launch plan yet, but we will be announcing one. I can tell you there will be continued rollout in both the Lexus and Toyota lineup,” Press says.
A spokesman bristles at the suggestion that the purpose of the hybrids is mainly to draw attention away from Toyota’s increasing introduction of thirsty light trucks and declining corporate average fuel economy.
“When we reach 100,000 (units), Prius will be our third best-selling passenger car. That’s no publicity stunt,” the spokesman says.
Toyota also recently introduced a new diesel engine in Europe, but Press says diesel-powered Toyota passenger cars are unlikely in the U.S. anytime soon.
“We’re watching it, we’re studying it,” he says. “It’s not just the investment, but I think the hybrid is a better solution given the regulatory environment and the fact that it’s probably cheaper to make a hybrid if you look at what would be necessary in (oxides of nitrogen) traps and filters to meet the same emission laws with diesel.
Clean diesels may have a role, Press says, depending on future environmental regulations and production costs, especially for over-the-highway vehicles, vehicles that need lots of torque, and perhaps even future hybrids.
“But right now, that’s really far off and we don’t see it. The hybrid solution is here today at the gas pump right now,” Press says.