Going for the Gold

High fuel prices, hurricanes and floods have not dampened the enthusiasm of James Press, president and COO of Toyota Motor Sales U.S.A.

“Our sales have set a record pace (in 2005),” he says, looking at about a 10% increase to about 2.24 million Toyota and Lexus models sold.

Although the forecast for the auto industry in North America as a whole may be gloomy, the outlook he sees for Toyota is “good, steady growth.”

What surprised Press in 2005 was the dramatic shift in U.S. Big Three sales, pulled up by special “employee pricing” incentives, then plummeting without them. Another surprise: soaring consumer interest in models offering good mileage.

“The U.S. market is responding to new products as never before,” says Press. “A good product yesterday may not have that much appeal today, so we have four new models coming out (by) next April.”

Characteristically upbeat, he says: “The Golden Age of the automobile business in the U.S. is just around the corner. In the next 10 years, the purchasing power of the youth market will be bigger than that of the baby boomers.

“And in the not-too-distant future, we will see industry sales here of 20 million vehicles per year.”

Toyota's growth strategy in North America is based on hybrids, fullsize pickup trucks and the youth market.

“There will be 64 million new drivers in the U.S. this decade,” he says. “That's a sizeable opportunity, and Scion is our brand to catch these trendsetters.”

Backing up Scion in the youth segment will be two new models: the 3-door Yaris (replacing the slow-selling Echo) and the retro FJ Cruiser. The Tacoma pickup also is attracting youthful buyers. It has 20% of the compact pickup truck market.

Toyota wants to become a major fullsize pickup maker with the Tundra. Its sales in 2005 were expected to rise 8%-9% above the 111,354 sold in 2004.

With a new Tundra plant under construction in San Antonio, Press foresees Tundra sales doubling in the first full year after ramp-up in late 2006.

Toyota so far is the runaway world leader in hybrid-electric vehicles (HEVs).

The Highlander HEV and Lexus RX 400h cross/utility vehicles have joined the HEV lineup alongside the Prius. Toyota expected total HEV sales to hit 140,000 in the U.S. in 2005, almost triple 2004 sales.

Adding to the HEV offerings will be the introduction of a Lexus GS 450h next spring and a U.S.-built Camry HEV late in 2006. Toyota predicts HEV sales could more than double to 300,000 in 2006. Eight more HEVs are under development.

On the horizon, Press perceives a new category of vehicle. “Manufacturers have moved out of coupes, sedans, minivans and SUVs, he says. “Now where do they go next?

“If you merge a Camry (sedan), Sienna (minivan) and 4Runner (SUV), you have a new vehicle like a large sedan, with all-wheel-drive capability, a high step-in point like an SUV, and maybe the utility of a vehicle that has three rows of seats, some of which fold down for storage.”

Toyota's growth has stepped up efforts to maintain dealer service capability.

“In the next three years, our dealers are spending $1.8 billion dollars of their own money to get the kind of capacity necessary to sustain customer satisfaction,” Press says. “Everyone can copy our products, but they can't replicate the partnership we have with our dealers.”

Not even Toyota's well-oiled machine is running perfectly. In October, it announced the recall of 1.4 million cars globally — its biggest recall ever — because of headlight switch problems. Another recall affected 75,000 '04 and '05 Prius HEVs because a software glitch caused some to stall at highway speeds.

Toyota's HEVs also are coming under fire for not living up to fuel economy expectations in real-world driving.

But these issues have not put a dent in sales.