Motor Corp.’s successes vastly outnumbered its failures, as it saw another year of incredible growth in 2005, largely due to its continued success in North America.
The auto maker’s light-vehicle market share grew to 13.3% from 12.2% in 2004, on record sales of 2.26 million vehicles.
Its Lexus brand registered a sales gain of 5.2% for the year, again overtaking thebrand to become the best-selling luxury marque in the U.S.
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And’s youth-oriented Scion brand reached its highest sales yet, blowing past 150,000 units in 2005, largely on the strength of the tC sports coupe, which made up the majority of sales.
To support its continued explosive growth in North America, the auto maker began exploring opportunities for more local production early in the year.
After much speculation, Toyota announced in June it would build another North American vehicle assembly plant, this one to be located in Woodstock, Ont., Canada, not far from its existing Cambridge, Ont., facility that built Toyota Corolla and Lexus RX models.
Toyota said the Woodstock plant, due to come on stream in 2008, initially would build 100,000 Toyota RAV4 cross/utility vehicles annually and employ 1,300. Early in 2006 the auto maker upped capacity to 150,000 units, and said staffing would rise to 2,100.
With the addition of Woodstock, Toyota said its North American production capacity would reach 1.81 million vehicles by 2008.
Toyota also announced in August it would expand capacity at its still-under-construction pickup truck plant in San Antonio, going from 150,000 units to 200,000 units annually. Employment, however, still was set at 2,000 jobs.
On the components side, Toyota in May said it would expand its Buffalo, WV, engine and transmission plant for a fifth time, investing $120 million to raise total output of automatic transmissions for the Camry, Solara, Sienna and Lexus RX models by 240,000 annually to 600,000 beginning in 2007. Toyota also said it would add 150 people to its 1,000-strong workforce at the West Virginia plant.
At the end of the year Toyota picked up an 8.7% stake inHeavy Industries Ltd., maker of Subaru vehicles, after Corp. sold its entire 20% stake in the small Japanese auto maker.
After much speculation,confirmed in mid-December that Toyota would build vehicles at its Subaru of Indiana Automotive Inc., plant in Lafayette, IN, which remained underutilized in 2005.
Toyota and SIA announced early in 2006 the plant would begin production of the Camry sedan.
In the spring of 2005 the auto maker unveiled plans to expand its Ann Arbor, MI-based Toyota Technical Center U.S.A. Inc., acquiring a parcel of land close to the existing facility, which would remain open.
Michigan Gov. Jennifer Granholm went to bat with state legislators for the auto maker to acquire the land, after a developer bid $25 million, some $16 million more than Toyota’s initial bid for the nearly 700 acres (283 ha). Granholm said the Toyota tech center expansion would result in high-paying jobs for the slumping Michigan economy.
The legislature agreed and in the spring of 2006 Toyota finalized the land purchase, spending $11 million on the parcel. Toyota was expected to begin construction in fall 2006.
Indeed, while Michigan-based competitors GM andMotor Co. saw their sales and market shares continue to slip away in 2005, Toyota’s prospects seemed ever positive.
“The company has been very successful at introducing the right products. Toyota seems to be the only volume maker in the world whose sales are growing almost everywhere, Koji Endo, head of Equity Research, Credit Suisse First Boston Securities (Japan),” told Ward’s.
Toyota Motor Sales U.S.A. Inc. Chief Operating Officer and President Jim Press was especially upbeat in 2005, telling a crowd at the Management Briefing Seminars in Traverse City, MI, in August that those in the auto industry have no reason to panic, as prospects point to a 20 million-unit sales year in the near-term.
As proof, he said baby boomers were living longer, and therefore driving more, and together with the birth rate and the rate of immigration, indicated the population of the U.S. was growing faster than that of China.
“If any of you ever get depressed and worry about the industry, take a Sunday, like I do sometimes, and go visit a hospital maternity ward,” Press told the crowd.
“What a great spot. Everybody’s happy…they’re showing off their babies. Those little plastic baskets with blue and pink blankets… every one of those little baskets is 20 purchase cycles,” Press reasoned.
All joking aside, Toyota did have to turn on its humble side when, later in the year, analysts began speculating it soon would pass GM to become the world’s No.1 auto maker, based on sales.
It didn’t. GM finished 2005 with 9.2 million units sold worldwide, vs. Toyota’s 8.0 million in its fiscal year, ended March 31, 2006.
However, auto industry analysts speculated that it was only a matter of time before Toyota usurped GM as the world’s top auto maker after Toyota vowed to produce 9.1 million vehicles in 2006, a 10% increase from the prior year.
And there was some confusion when Chairman Hiroshi Okuda reportedly spoke of aiding GM by increasing prices on Toyota vehicles in North America.
However, Press insisted Okuda was misquoted and said Toyota merely did not want to kick its competitors when they were down.
Still, Press later defended Toyota’s exponential growth in the U.S. in light of GM andwoes.
“The reality is right now, while some other companies may have excess capacity, Toyota,(Motor Co. Ltd.) and (Motor Co. Ltd.) have excess demand,” Press told Ward’s. “I don’t think you can put a limit on how many American jobs we should provide.”
Regardless, Toyota did end up raising vehicle prices slightly in the U.S., as it has tended to do at the start of every new model year and, at times, during the course of the year.
The auto maker’s continued push of hybrid-electric technology was in full force in 2005, as it released its first new hybrid nameplates since the Prius hit the U.S. in June 2000.
In April, the HEV version of the popular Lexus RX CUV debuted as the RX 400h, and in June the Toyota Highlander Hybrid CUV was launched.
Both models sold reasonably well, although, when the year came to a close, the Prius still dominated Toyota’s HEV lineup, accounting for 107,897 of the total 146,512 hybrids sold.
At the Traverse City management seminars Press vowed that by the start of the next decade, HEVs would comprise a quarter of the auto maker’s total sales in the U.S.
Other notable U.S. vehicle introductions for Toyota in 2005 included the Lexus GS midsize sedan, Lexus IS sport sedan, and the Toyota Avalon large sedan.
In Mexico, Toyota officially opened its first plant early in the year. Located in Tijuana, Toyota Motor Mfg. de Baja California began by producing a nominal number of Tacoma compact pickup trucks, as well as truck beds for Tacomas built there and at Toyota’s New United Motor Mfg. Inc. joint-venture plant in Fremont, CA.
Toyota, which began selling vehicles in Mexico in 2002, saw its sales there increase 47.9% in 2005 from the previous year. The auto maker added Hiace and Tacoma light trucks to its Mexican lineup to bring its offerings to seven light trucks and five cars.
Overseas, Toyota’s success story was much the same, as its sales expanded in nearly every global market it operated in 2005.
Toyota was again the top brand in Australia, with record sales of 202,817 units, giving it a 20.5% share of the Australian market, outpacing No.2 Holden Ltd.
Toyota also set an export record in Australia, sending the most cars ever, almost 69,000 Camrys, from its Melbourne-area plant to markets in the Middle East, an increase of 5.5% from its 2004 record.
Toyota also said it would expand production at the plant, going from 115,000 units annually to 150,000, largely due to the signing of a free-trade agreement between Australia and Thailand.
A blemish on the auto maker’s otherwise perfect record was the lackluster performance of its Lexus brand in Europe.
While European Lexus sales reportedly rose 16% to 28,777 units in 2005, it still trailed the main German-brand competitors Mercedes-Benz and, whose luxury cars and light trucks sold in the hundreds of thousands in the region.
In India, Toyota’s local unit, Toyota Kirloskar Motor India Ltd., announced a joint venture with Daihatsu Motor Co. Ltd. to produce 100,000 small cars annually, with up to 100% local parts.
The vehicles were to be badged Passo by Toyota and Boon by Daihatsu and were expected to average 49 mpg (21 L/100 km). The models were to be positioned between the mini- and compact-car segments.
Toyota announced it had its sights set on a 10% share of the Indian vehicle market by 2010 and a 15% share by 2015, up sharply from the 5% share it held in 2005.
It already saw success with the Innova multipurpose vehicle, launched in February 2005 with about 70% local content.
Late in the year, Toyota received approval from the Russian government to build a 50,000-unit vehicle assembly plant in St. Petersburg. Initial plans called for the production of 20,000 Camrys per year, beginning in December 2007. Some 500 new jobs were to be created.
China remained the rare weak spot in Toyota’s plan for global domination, as its 2005 sales, while up, were well behind those of market leaders GM andAG.
But activity was increasing.
Toyota began selling five Lexus models in China in 2005 and on Dec. 15 built the first Prius outside Japan at Chinese joint venture SichuanToyota Motor Co. Ltd. The auto maker expected to sell 3,000 Priuses in China in 2006.
At home in Japan, Toyota’s sales fell in 2005. It launched its Lexus brand there in late summer, with sales initially off to a slow start. Lexus ended the year with 10,293 units sold, below the 12,000 forecast. Toyota planned to sell 100,000 Lexus vehicles annually in Japan by 2015.
Other negatives for Toyota in 2005 were its largest recall ever, 1.4 million vehicles, announced in October and blamed on faulty headlight switches; and its Prius also suffered a recall due to software issues that led some to stall while being driven at highway speeds.