Special Coverage

Management Briefing Seminars

TRAVERSE CITY, MI – Toyota Motor Sales U.S.A. Inc. President Jim Lentz admits what many industry watchers and fans have been saying for the last two years: The current Scion xB isn’t very exciting.

“I think it lost a little bit of its edge,” Lentz tells media at the 2009 Center for Automotive Research Management Briefing Seminars here. “It lost some of its fun-to-drive characteristic. “(If we could) do things over again, we would (add) a little bit of fun-to-drive back to that vehicle.”

Too much of the xB was “influenced in Japan,” he adds, and not enough from America, even though the Scion brand, barring Guam and Puerto Rico, is sold solely in the U.S.

Lentz is non-committal as to whether Toyota will offer a third-generation xB or replace it with a different model. Such cadence was the early plan for Scion, in order to keep its product fresh and intriguing for the younger buyers the brand is intended to lure.

Under Toyota Motor Corp.’s new management structure for its North American operations, product-planning and production decisions will be more in U.S. hands than ever before. Those at the helm in addition to Lentz are Yoshimi Inaba, president of Toyota Motor North America and Atsushi Niimi, TMC executive vice president-manufacturing.

At his round-table discussion Wednesday, Lentz also says the future is uncertain for Toyota’s midsize body-on-frame SUVs. “I think that’s a market that has had the greatest shift in customer demand, away from frame-based and toward car-based.”

While some buyers still need large ladder-frame SUVs for towing, midsize SUV buyers have migrated to cross/utility vehicles. “We see the vast majority of (our midsize utility) business headed toward car-based SUVs,” he says.

“The question becomes do we pull out of segments or do we refine our offering,” and not have as many SUVs to cover three segments.

Toyota’s FJ Cruiser, 4Runner and Lexus GX body-on-frame midsize SUVs have seen significant volume losses this year. Ward’s Middle SUV group, where the first two models are placed, saw a 58.8% drop through July, the largest volume decline of any segment this year.

At the opposite end of the spectrum, Lentz says Toyota has seen strong demand for the new ’10 Prius since its sales launch in May, with deliveries this year expected to hit the 135,000- to 140,000-unit range. That still falls short of the record 180,000-plus sales in 2007, a drop he blames on capacity constraints.

Prius production also has been hampered by its optional solar roof, dedicated to running an interior fan. Toyota pegged the take rate of the roof at 2%-3% of total sales, but Lentz say “demand has been running closer to 12%.”

Since the government “Cash-for-Clunkers” program began late last month, Prius days’ supply has gone from 12-14 to 6-7 days, Lentz says. The Prius prior to last weekend was Toyota’s second-best-selling model sold under the incentive scheme, Lentz says, with 5,400 deliveries, following the compact Corolla, with 6,300.

Toyota’s under-construction assembly plant in Blue Springs, MS, still is set for Prius production, contrary to some reports, he says. However, the facility will be on hold for startup as long as the present market volatility continues.

Despite red-hot demand, Lentz says the Prius “isn’t the perfect car for everyone,” as many consumers are unwilling to sacrifice their larger vehicles. However, Toyota is “hearing loud and clear” that buyers want better gas mileage.

“I think that’s the challenge,” he says. “How do we take a fullsize truck and improve the mileage by 20%-30%, because they don’t want to get out of their fullsize truck.”