Toyota Thailand’s Eyes on Reclaiming Sales Prize

Toyota Thailand heads into 2014 determined to recapture the car-sales title Honda narrowly won last year for the first time, wielding the 11^th-generation Altis (Corolla) as its main weapon.

Discussing the automaker’s 2013 results and near-term outlook, Toyota Thailand President Kyoichi Tanada also expresses grave doubts about the company’s future in Australia, where it will be the only major manufacturer after Ford and General Motors end auto production over the next three years.

The country’s overall No.1 brand projects industrywide sales of 1.15 million units this year, a 13.6% drop from 1.33 million in 2013. Last year’s total was off 7.4% from the record 1.44 million deliveries recorded in 2012, when demand was artificially boosted by government incentives for first-time car buyers.

Toyota, which maintains official Thai sales and production data, itself saw 2013 deliveries fall slightly more than the countrywide rate, down 13.7% to 445,464 units. Its 33.5% market share was off 3% from the previous year.

The automaker is confident it will bounce back from last year’s double-digit sales decline and knock Honda out of first place.

“In January to September (2013) we were beaten by Honda by 18,000 units, but in the last quarter we won over Honda by 15,000 units, so we are going to win back our position,” Tanada says during the media launch of the Altis C-segment sedan.

“The trend is good this year.”

Breaking down the 2013 data, Tanada says: "Losing isn't good for us but there are (several) factors. One of the main reasons was the delay in (launching the) Yaris, plus, we ran out production of the Altis as we closed it to prepare for the new Altis."

The Yaris was one of the last vehicles introduced during the first phase of Thailand’s eco-car program, which offers tax breaks to automakers producing cars that meet production and strict fuel-economy and emissions standards. Honda’s eco-car, the Brio, has been on the market for several years.

The Yaris has “only been on sale for two months, but the market is looking well,” says Wichien Emprasertsuk, Toyota Thailand executive vice president. “We have about 5,000 (orders) now and sales have increased.”

Slotting the 1.2L Yaris in the eco-car segment has allowed Toyota to reach out to new customers and to create differentiation with its popular Vios small sedan.

With the Vios and its 1.5L engine, “we are trying to open the market to 20-somethings and graduates,” Wichien says. “This is a market (that) will increase.”

Toyota also expects the Altis to help make up ground lost to Honda when it launched its refreshed Civic sedan about 1-½ years ago.

Thailand’s most-popular car with 670,000 units sold to date, and a ubiquitous sight on the streets of Bangkok, the Altis nevertheless is perceived by some as being mundane because it is the overwhelming choice of taxi operators.

Toyota has given the new Altis distinct styling and a more upmarket interior. The automaker hopes to shift perceptions of the car and find both new and Civic-conquest buyers.

The new-generation Altis features an improved CVT and retains essentially the same 1.6L and 1.8L engines, but the range-topping 2.0L mill, which is sold only in small numbers, has been dropped. A compressed-natural-gas option comes with the 1.6L engine.

Toyota’s target of 48,000 domestic deliveries this year should be “achievable,” Wichien says. Another 40,000 units are earmarked for export to markets including Latin America, the Middle East, Australia and several other countries within the ASEAN trade bloc.

The new Altis model, like the outgoing one introduced in 2008, will be built at the Gateway City plant in Chachoengsao province which has been upgraded and expanded in recent years.

Toyota’s current annual manufacturing capacity in Thailand is 850,000 units. The automaker expects to add 200,000 units when it builds a new plant near its existing truck-making facility in Ban Pho, also in Chachoengsao province, probably within two or three years,” Tanada says.

Manufacturing plans face a starkly different future in Australia, where Ford is to end vehicle production in 2016 and GM Holden a year later. That will make it “unviable” for Toyota to remain as the country’s sole OEM, Tanada says.

“We are now thinking of the future,” he says. “The suppliers of Toyota and GM (Holden) are the same, so there is a big effect on Toyota. So even though Toyota would like to continue in Australia, how we can continue?

“We will discuss with the government whether we or suppliers can get assistance, so that will affect whether we can continue in Australia.”

Toyota also faces uncertainty within Thailand, which has seen three months of protests by opponents of the current government.

The Thai government has imposed a 60-day state of emergency in Bangkok and the surrounding provinces.

“I hope the political situation will ease down so our (Tokyo) headquarters will be confident in investing in Thailand,” Tanada says, adding investors might bypass the country because of the unrest.

“Not just with Japanese investors but (with) others, this will have an effect,” he says. “Maybe companies will move to Indonesia or Myanmar.”

Toyota is committed to remaining in Thailand. “What we will have here we will continue,” Tanada says, but warns new investment might go elsewhere because of the automaker’s regional reach.

“Indonesia, Vietnam, the Philippines and Malaysia are important markets,” the executive says. “If we build new plants it's not in connection to Thailand.”

The Thai political unrest has not affected sales targets, manufacturing operations or deliveries of cars to dealers, Toyota officials say, although the automaker recently relocated about 150 staffers from downtown Bangkok to offices about 20 miles (32 km) away.

 “We want the political situation to end as soon as possible so it doesn’t impact on our business,” Tanada says.“In the long term we will have to consider the political-economic situation.”

“When the floods happened in 2011 the public and private sector, everyone, did their best to encourage investment” to return, he says. “Thailand is the leader in AEC (ASEAN). I'm confident Thailand will continue to be the leader in AEC.”