MELBOURNE – When Toyota Motor Corp. first entered the Australian market in the 1960s, General Motors Corp. and Ford Motor Co.’s subdiaries were the reigning royalty.

Fast forward to 2005. While GM’s Holden Ltd. and Ford Motor Co. of Australia Ltd. continue to thrive, holding the No.2 and No.3 sales spots, respectively, Toyota is proving to be the most popular brand.

Toyota’s new $47 million tech center.

The Japanese auto maker sold 201,737 vehicles last year, for a 21.1% market share. Holden followed with 178,027 sales and Ford at 135,172. (See related story: Toyota, Holden Dominate Oz Third-Straight Annual Sales Record)

As a result of this dominance, Toyota on March 7 opened its first technical center in Australia, which, along with another center in Bangkok, will oversee Asia/Pacific Australia (TTCA) vehicle development for the Japanese brand. Up to now, vehicle development for the Australian market was carried out within Toyota Motor Corp. Australia Ltd.’s Melbourne headquarters.

Some 24 engineers currently staff the new $47 million Toyota Technical Center Asia Pacific in the Notting Hill district here, and plans call for increasing the number to 120 by 2007.

This month, TTCA was given the lead development for the next-generation Camry for the Australian market, after working on the project for the last two years with the parent company’s head technical center in Japan.

Although Toyota Australia is a domestic manufacturer, along with Holden, Ford and Mitsubishi Motors Australia Ltd., it exports 60% of the Camry and Avalon models it builds at its Altona, Victoria, plant but none to America.

TTCA Vice President and Chief Operating Officer Max Gillard says Australians have requirements for their vehicles that differ from the U.S. market.

Like Americans, Australians favor larger vehicles. Indeed, large passenger cars dominate the market here, led by the Holden Commodore, Ford Falcon and Camry. And demand for SUVs now is growing.

But Gillard says Australians (the country was founded by Europeans and remains under British rule) want a European driving feel. “When you look at the driving pattern, it’s a much more European pattern,” he says.

“In other words, a lot of stop-start, a lot of winding, a lot of overtaking; where in North America, most of it is freeway or separate carriage-ways.”

A Toyota Land Cruiser in Australia, for instance, has a stiffer suspension and quicker turn-in than the North American model.

“Perhaps the average American will think, ‘Gee, this car rides a bit stiff,’ but that’s the way Australian people like it,” Gillard says. “They like (that) brake feeling, to be able to what we call ‘jump-in.’ When you get on the brake, you know it’s there, (along with) slightly heavier steering.

So while the Australian models may look the same as U.S. versions, the tuning for the domestic market is different, he says.

Meantime, Toyota’s new technical center is working to perfect prototype-less vehicle development for the next-generation Camry, using what Gillard calls “a confirmation model” rather than creating parts from scratch. Locally produced body parts are used, as well as mechanical components from Toyota operations worldwide.

“The confirmation vehicle is really not a prototype, because you’re not using prototype parts,” he says. TTCA recently tried prototype-less design in crafting a concept car shown at last year’s Melbourne Motor Show by going from CAD design to prototype tooling and eliminating a clay model.

Methods used to develop the bB (Scion xB in the U.S. market), which Gillard calls a “prototype of prototype-less,” were used with the Sportive and will be applied to the next Australian Camry.

“We developed the B-R-A-D, a computer system which is basically able to simulate all of the crash performance, and we have effectively drawers of design,” he says. “We want an A pillar? All right, pull (one out of the drawer). So already the design is done, so we’re able to morph (a design) to suit what we want for a specific car.”

The elimination of prototype builds not only cuts about nine months out of vehicle-development time, but also requires bringing engineers of varying responsibilities together sooner “to understand the implication of my design on your process or your system,” says Gillard.

“The main reason we can do (no-prototype builds) these days is electronic tools,” he adds, which can confirm “whether nut No.1 will fit or whether the air conditioner can go into the door; how much it’s going to weigh; the thrash performance and so on.”

This type of computer simulation allows for improvement in vehicle design much earlier in the program. Gillard says the next Australian Camry, for example, won’t be 100% production ready, but “more like 90%, compared with maybe 70% as a prototype.”

Plus, he says prototype production not only adds time but is a huge expense, costing about A1.3 million ($1 million) for a new model. “And in the end, it really just confirms what people thought anyway,” he says.

TTCA President Takeo Yagi says one of the benefits of locating a technical center in Melbourne is the wealth of automotive expertise due to a long history of vehicle manufacturing here.

He says in Asia, while there are many automotive suppliers, most do not have development capability for their parts. Whereas in Australia, and specifically Melbourne, “there are many excellent suppliers who have excellent development capability.”

Gillard echoes Yagi’s praise of the Australian supply base, adding that unlike in North America, there is little difference between supplier attitudes and supplier facilities toward customers of foreign vs. domestic origin.

“I don’t think there’s any difference (between Holden and Toyota suppliers),” he says. “In the early days, I found there was a lot of comment, ‘If it’s good enough for Holden and Ford, why isn’t it good enough for (Toyota)?’ But those days are gone now.”

He says there are lessons to be learned by U.S. suppliers. “I’ve been a number of times to the States with (Toyota Motor Mfg. North America) and gone to suppliers, and the operations are big enough they can virtually have factories dedicated to Toyota or GM.

“I went into the Toyota plant and it smelled like Japan. But then I went into the Chrysler building and it was just mayhem,” he says. “So, yes, the supplier’s done everything that Toyota wanted, but (the supplier) only did it because Toyota wanted it.

“It was obvious (the supplier) didn’t recognize or realize or agree that this was beneficial to (its) business. I think the American industry has got tremendous opportunity if it (just) tidies up its own backyard.”

Gillard says most Australian suppliers now realize they must be global in their efforts to win business. He credits Holden’s global purchasing system, which demands steep cost cuts, with helping push under-performing suppliers here into shape. This has benefited Toyota as well as other local manufacturers.

“I think most of the suppliers realized in order to meet the cost targets issued by Holden, or us for that matter, you can’t just cut your margin,” Gillard says. “If you cut your margin, you’ll die. So they had to implement changes to their product design, their process and whatnot to reduce cost in order to meet those targets.”

To help suppliers meet their goals, Toyota Australia does a lot of “supplier-development activity,” meeting with suppliers to provide assistance if the companies request it.

Gillard admits that in doing so, “we’re helping our competitors. But that doesn’t matter so long as we are positive that we’re reaping the benefits of work (our suppliers) are doing.”