Tundra Pickup Sales Hurt By Economy, Competitor Spiffs, Toyota Says

HALF MOON BAY, CA – The current-generation Tundra fullsize pickup’s disappointing sales and low market share after four years on sale in the U.S. are not due to shortcomings of the truck, itself, but rather the nation’s ongoing economic downturn and competitors’ generous incentives, a top Toyota official says.

“It was a tough time to launch the vehicle; it was conceived and designed in an industry that was 2.2 million (fullsize-truck sales), peaked at 2.5 million, then contracted to 1.2 million,” Bob Carter, group vice president and general manager-Toyota Div., tells Ward’s at a recent media event here.

“When the market contracted to that level, we had $6,000, $7,000, $8,000 in the bed of the truck in incentives coming from competitors. We chose not to play in that,” he says.

Toyota launched its fullsize truck in early 2007 with high hopes it would accelerate sales, unlike the two smaller generations before it. But so far, it’s only taken a tiny bite out of the Detroit Three’s market share.

The ’07 Tundra was Toyota’s most-powerful truck to date, equipped with a 5.7L V-8 that at the time provided a segment-best 381 hp. The auto maker also claimed supremacy in various interior and exterior dimensions, including dominance over the Dodge Ram Mega Cab.

“These are the big, bad Texas trucks we’ve been waiting for,” Don Esmond, senior vice president-automotive operations for Toyota Motor Sales U.S.A., told a jubilant crowd in November 2006, at the grand opening of the dedicated Tundra assembly plant in San Antonio.

The Tundra went on sale in February 2007.

Shortly after, the economy in California, Toyota’s biggest U.S. light-vehicle sales market, plunged due to a construction slowdown. Gas prices spiked to $4 per gallon in summer 2008, just before the Lehman Brothers’ collapse sent the entire U.S. economy into a tailspin in autumn.

Tundra share trended downward in last four years.

In its launch year, the Tundra earned a 9.1% share among light-duty competitors, despite falling shy of its 200,000-unit sales target. But since then, the Toyota truck has lost share while most competitors have recovered, Ward’s data shows.

In comparison, the Ford F-150, the perennial top-selling vehicle in the U.S., held a 29.5% segment share in 2007, rising to 37.6% in 2010. This is despite a decline of more than 100,000 deliveries between 2007’s 633,949 units and 2010’s 502,125.

Tundra sales, along with most other truck brands, surged last year to 93,309 from 2009’s 79,385. But its share still slipped to 7.0% vs. 2009’s 7.2%.

What’s more, over the last four years, while the Tundra remained relatively static, the competition has intensified, refreshing their offerings to a greater degree.

Hoping to appeal to a more fuel-efficient-minded customer, Toyota in 2010 introduced a smaller but more-powerful 4.6L V-8, replacing the carryover 4.7L. The newer engine produces 310 hp and 327 lb.-ft (443 Nm) of torque.

However, it is matched or exceeded by similar V-8s and Ford’s 3.5L V-6 EcoBoost, just launched in the F-150. The mill produces 365 hp and 420 lb.-ft. (569 Nm) of torque, while earning an Environmental Protection Agency-estimated fuel economy of 16/22 mpg (14.7-10.7 L/100 km).

That tops Toyota’s new 4.6L V-8’s 15/20 mpg (15.7-11.8 L/100 km) and the 4.0L V6-equipped Tundra’s 16/20 mpg (14.7-11.8 L/100 km).

One factor Carter does not address, but is at play against Toyota, is General Motors, Ford and Chrysler large-pickup fleet sales. With retail deliveries contracting in recent years, fleet sales now make up a bigger piece of the pie.

For instance, of the 1.14 million ’09 fullsize pickups registered in the U.S., 16.6% were to fleets, according to data provided to Ward’s by the publication Automotive Fleet. In comparison, 15.5% of the 2.14 million ’07 models registered went to fleets.

Some 3.8% of the 78,298 ’09-model Tundras were registered to fleets, up slightly from the 3.3% of the 171,703 ’07 Tundras registered.

In comparison, 19.0% of the 324,977 ’09 Chevy Silverados registered were to fleets, vs. 17.6% of the 622,087 ’07 Silverados.

There’s another factor at play in the Tundra’s struggle: the fierce loyalty among Detroit Three fullsize-pickup buyers.

“It’s sort of the last great bastion of brand loyalty,” says IHS Automotive analyst Rebecca Lindland. “You’re a Ford-truck family or a Chevy-truck family or a Dodge-truck family.”

It’s also unlikely Toyota can count on the dominant position it holds in the compact-pickup segment – where the Tacoma has been the top-seller for years – to transfer to fullsize trucks, she says.

Large pickups make up a “significantly different” segment due to buyers needs for towing and payload capability, compared with compact pickups, where GM and Chrysler no long play and Ford is scheduled to exit.

There may be some light at the end of the tunnel for Toyota, as longer term Lindland sees the fullsize-pickup customer base evolving “into the younger buyer who tends to be more global” or import-friendly.

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