By on January 4, 2008

07_tundra_crash.jpgThe [literally] rivet counting debate over whether or not one should include the Scion brand in Toyota's sales totals– to determine whether or not Toyota's overtaken Ford as America's top automotive brand– seems to have sailed straight over the media's head. In the hangover morning after December's dismal new car sales results, the mainstream press has pronounced Toyota the new champ. The news ain't all good for ToMoCo. Reality has forced them to rein-in their previous '08 throw-down, where they predicted a three percent sales growth for '08. The Wall Street Journal reports that company spokesman Irv Miller told some industry types that a "confluence of factors," including a widespread credit crunch, high gasoline prices, a housing downturn and "critically fragile consumer confidence" has forced his employer to revise the number downwards. The Japanese automaker says it's now looking at a one to two percent gain for the year. Echoing GM's spinmeisters, contradicting most every gainfully employed financial analyst, Miller reckons sales will rebound in the second half of '08. Meanwhile, the Houston Chronicle says sales of Toyota's Texas-built Tundra fell short of the company's 200k target by 3,445 trucks. "Like the rest of the industry, the full-size pickup segment saw its fair share of challenges in 2007," said Toyota brand manager Bob Carter. Hell boy, you ain't seen nothin' yet. 

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27 Comments on “Toyota Punts 3% Sales Growth for ’08 Prediction...”


  • avatar
    86er

    Yes, Robert, Tundra sales have hit a wall, a 4-Star wall, that is.

    All kidding aside, Toyota has nothing to be ashamed of, in terms of growing their sales in a contracting market. While trucks won’t be displaced as the top North American sellers anytime soon, Toyota is wise to get in their first crack at a full-sizer now, and get the kinks out for the second (or is it 3rd?) generation.

    When the housing market recovers, the Tundra’s rep will be known, for better or for worse.

  • avatar
    KatiePuckrik

    I heard a very interesting statistic about Toyota the other day which puts a new spin on Toyota’s power and the dire situation that Detroit are up against:

    If tomorrow, Toyota didn’t sell one car and lost all their sales, Toyota could still keep the company running (keeping plants running, offices open and dealerships ticking over) because they could live off the interest of their cash hoard.

    So, unless Toyota make a major (and I mean MAJOR!) mess up, the future looks good for Toyota, even with their conservative sales figures.

  • avatar
    Kevin

    No prob, for the year 2008 we won’t need to worry about whether to include Scion or not.

    Also, I’d say there is nothing at all unreasonable about expecting a rebound by the latter half of ’08. I’m still skeptical sales will drop for the 1st half of 08. Have you convinced yourself after 2 years that vehicle sales in the U.S. are now permanently destined to fall? Does that really make sense to you?

  • avatar
    umterp85

    Toyota’s US cash cows are the Camry and Corolla. Their primary differentiation was quality and reliability——they built each franchise on these qualities.

    I do not believe Toyota can differentiate on these qualities anymore and the brand is now chugging primarily on years of goodwill that has translated into loyalty (it certainly isn’t on styling, performance, or materials quality)

    The question is whether increased competition combined with recent quality issues will get people to think outside their rather bland Toyota box ?

    I don’t think it will happen in great numbers anytime soon—–but they continue with bland grandpa-like vehicles that offer no quality or reliability advantage—3 years from now could be a different story.

  • avatar

    umterp85 :

    “bland grandpa-like vehicles that offer no quality or reliability advantage”

    The thing is, people buy bland grandpa-like vehicles (ipso facto) . And Toyota owns it customers (like GM did). They’d have to do something more than simply let the competition catch-up to fall by the wayside.

    In other words, for the foreseable future, ToMoCo’s market share is theirs to lose, while the domestics’ are theirs too gain. Still.

  • avatar

    And now the question is, does Toyota continue to offer GM-like incentives on the Tundra or do they lower production to a more realistic level?

    I doubt they can keep the sales pace for 2008 without the same discounting. Granted, if any balance sheet can afford the incentives, its Toyota.

  • avatar
    umterp85

    Robert—If your competitive context is merely the domestics—-you have a point.

    My competitive context extends to include Nissan, Hyundai, and that little company called Honda. All three have recently introduced vehicles that are equal and arguably better than the cash cow Camry—there is the new Malibu and Fusion as well.

    Also last I looked—the so-called “new” Corolla ain’t gonna break any new ground either and is more reminicent of the “Focus” thinking than “Civic” thinking.

    Net—-as far as the Camry / Corolla—Toyota seem complacent to me—-letting their goodwill define their brand more than product. Honda seems to be better able to leverage their goodwill along with product that offers tangible improvement with each iteration—most notably on the Accord and Civic.

  • avatar
    tulsa_97sr5

    Sajeev, it seems to me that ford, gm, dodge matched or exceeded tundra’s incentives most of the year. I suspect their increased incentives hurt them more than the lost sales did.

  • avatar
    Rday

    I don’t see Toyota being foolish/greedy enough to lose their customers. They saw how Detroit self destructed and are way too smart to repeat that fiasco. Took my 04 Prius [87K] in for a small problem today. Wife left the door open and the battery discharged. Battery would not hold a charge very well. Dealer checked it and told me to just keep it on the charger for several more hours and all will be well. I tried to buy a new battery since the car is 4 years old but the dealer rep insisted that the battery is fine and just needs a little more charging. Service was free. It is this kind of excellent service that keeps me coming back to Toyota and Honda. They don’t have the most exciting cars but they have the best/most reliable vehicles IMO and a great dealer network. Many of my friends repeat the same impressions that I have. Toyota and Honda will do just fine if my dealers are any indication of how they treat customers.

  • avatar
    RobertSD

    The incentives on Ford’s and Chevy’s full-size lines did not move up to Tundra’s level until after its blockbuster June. The only full-size truck whose incentives can be mentioned in the same breath rightfully is Dodge (maybe Nissan – do they still sell trucks?).

    It’s still a greater trend that I am interested in. This has been a record year for incentives from Japanese automakers. The amount of money poured by Toyota into both dealer cash and manufacturer rebates was amazing this year.. The only company that is somewhat restrained still is Honda, and they have also stepped up incentives and fleet sales this year. GM and Ford, meanwhile, have tried to hold their line on incentives to some extent (and have succeeded as per Edmund’s) and reduced their fleet sales drastically.

    All of Ford’s and GM’s declines (I’m leaving the disaster known as Chrysler out of this) weren’t due to some lack of interest despite giving their cars away like they had in the past – most of it can probably be attributed to a decline in incentives in absolute and especially in relative terms and reduction of fleet sales (the rest is, of course, old product and persistent bad image).

    The worst tale of all is the Tundra. Toyota probably spent over $1 billion in incentives to try and hit its sales target – a sales target which is 100k below their production capacity right now. I have never seen such overcapacity at Toyota. And the road is not going to get easier for them. Dodge and Ford both have new trucks out next year, and while I don’t expect Toyota to sit still, I doubt they will be able to counter quickly next year to offset those challenges except through more incentives.

    I still don’t think things are as rosy at Toyota as everyone seems to think. GM and Ford have their set of challenges, have overcome some hurdles and will be introducing some stellar models in the next several years (again, Chrysler absent), but they aren’t the only players in this increasing competitive market (Honda, Nissan, Subaru, Mazda, VW, etc). We’ll see what happens in 2008.

  • avatar
    whatdoiknow1

    If tomorrow, Toyota didn’t sell one car and lost all their sales, Toyota could still keep the company running (keeping plants running, offices open and dealerships ticking over) because they could live off the interest of their cash hoard.

    This is the issue that GM and Ford can not get past. If the above statement is correct than the playing field will not level out anytime in the near or somwhat near future. Toyota is in the financial position to check any move that GM or Ford makes in the next couple of years.

    We can not look at the incentive game in the saem light for Toyota as we do for GM and Ford. Toyota is in the position were it can basically give it Tundras away for free to build the customer base and marketshare it is trying to currently get.

    The problem facing GM and Ford is the fact that the Tundra IS a very competitive product! If Toyota can make some easily identifiable improvements to the design in the next two years folks will have a very hard time passing up a great deal on a very good truck.

  • avatar
    umterp85

    whatdoiknow1 “The problem facing GM and Ford is the fact that the Tundra IS a very competitive product! If Toyota can make some easily identifiable improvements to the design in the next two years folks will have a very hard time passing up a great deal on a very good truck.”

    You statement assumes there is not strong brand equity and loyalty associated with the F150 and Silverado.

    Just as Ford (Fusion) and Chevy (Malibu) cannot assume they will not convert Camry users through merely competitive product even if they offer a great deal—–you would be mistaken to think the Tundra can do the same under similar circumstances.

    There are simply ALOT of F150 and Silverado owners that would not be seen in a Tundra or Titan just as there are ALOT of Camry drivers who would not be seen in a Malibu or Fusion.

  • avatar
    jolo

    Yes, but there are probably more Camry/Prius/Avalon drivers who, when the time comes to buy a truck, would rather buy a Toyota truck than there are F150/Silverado owners who, when the time comes for them to buy a car, would buy a Fusion/Malibu.

  • avatar
    86er

    jolo:
    Yes, but there are probably more Camry/Prius/Avalon drivers who, when the time comes to buy a truck, would rather buy a Toyota truck than there are F150/Silverado owners who, when the time comes for them to buy a car, would buy a Fusion/Malibu.

    Check your math again.

    Using the logic of “well Toyota passenger car owners are in the Toyota showroom and see the Tundra” works conversely if one assumes that the Fusion and Malibu are competitive with the Camry and Silverado or F-Series owners are in their respective dealerships and see such vehicles. It sounds simplistic, and it is.

    Further to the article, the Tundra came up about 12,000 units short this year of outselling the Sierra. Perhaps next year.

  • avatar
    casper00

    The thing about toyota is that they know that they got the family sedan category locked with their camry and corolla. I beleive this is what makes toyota different from the other car manufactuer, toyota doesn’t have to spend countless amount of money to make their models hot or attracting and people will still buy it. Other companies tried to hard to come up with new models and design which cost alot of money. So with that in mind toyota can spend more time and money improving their truck line-up and in this case the tundra. So what if they didn’t make their goal this pass year it’s not going to bug them they’re just gonna go back and until they make it right. Folks it’s just a matter of time….

  • avatar
    Steven Lang

    casper00… it took Toyota over 25 years to get the subcompact portion of the market ‘right’. The Tercel, Paseo, and Echo were poor sellers that simply dwarfed the Civics, Cavaliers and Escorts.

    The Corolla has been a decent seller internationally. But I would say that the sales of this model weren’t strong until the latest generation came along in 2003.

    It took nearly 20 years for Toyota to have that could compete well with the Chrysler models, and Toyota has experienced some rather nasty dry streaks with the last gen MR2, 90’s Celicas, the Supra, the Solara, and the new Scions.

    Toyota still has plenty of catch-up work to do in the marketplace. Even with the hybrid technology, Toyota’s propensity to add weight and size with every succeeding generation is not a good trend over the long term.

  • avatar
    KixStart

    Steven Lang: “Toyota’s propensity to add weight and size with every succeeding generation is not a good trend over the long term.”

    People often remark on this. But overlook Toyota’s periodic introduction of new small models. The Yaris sedan, new in the last couple of years, checks in at under 2300 lbs. It’s a very nice SMALL car. What more do you want? So their smallest car isn’t a “Corolla” any more. Who cares?

  • avatar
    Steven Lang

    People who are in the market for compact vehicles for one… which probably encompasses more than a quarter of Generation Y buyers.

    Then you have those who are interested in an economical vehicle that is multi-functional such as the Xb. GT and hatchback drivers, midsized sedan buyers , and even luxury car owners who want a more responsive and fun to drive vehicle to own are not going to be knocking on Toyota’s door if they don’t get the weight and handling issues under control.

    SUV handling and weight are not ‘in’… and if they begin using their hybrid drive technology as an opportunity to add more and more weight, they may very well experience the same negative demographic consequences that GM went through during their era of dominance.

  • avatar
    mel23

    My understanding is that Toyota is profitable, and will continue to be in spite of a decline in sales of their large Tundra and their SUVs, while GM and Ford are not, and will bleed to death with a sales decline in their large profitable vehicles. Toyota has apparently been struggling to keep up with their expansion in new plants, so a slackening in the rate of growth might be welcome.

    Lots of unknowns of course. What else does GM have to sell? How many older UAW workers can be replaced by lower-wage replacements? They’ve announced cutbacks in production of the Silverado/Sierra trucks, but they still have lots of fixed cost in these plants that will have to be spread across fewer vehicles. Are they making money in China, etc. or is it still going out faster than it’s coming in? For GM and Ford, it’ll be about money at some point.

  • avatar
    KixStart

    Steven Lang, I don’t undeerstand your objection.

    I buy a Corolla. A few years down the road, I buy another. A few years down the road, I decide the Corolla’s too big. So, I buy a Yaris.

    What’s wrong with that? What am I going to do instead? Demonstrate my annoyance with the upsizing of the Corolla by buying a Cobalt? Somehow, that strikes me as reeeeally unlikely.

    If Toyota doesn’t have a range of vehicles that meet market needs then, sure, they’re going to hurt. But that doesn’t appear to me to be the case. I’m not hung up on the model names.

  • avatar
    Chaser

    On the other hand, as a 1st gen. xB owner I don’t like the size increase on the new xB. In this case Toyota doesn’t offer anything else I’m interested in. If I had to buy a car tomorrow, it would not be Toyota. It’s not going to bankrupt the company I know, but Toyota has definitely alienated a lot of original Scion owners.

  • avatar
    tulsa_97sr5

    Chaser, another xB owner here and I agree. They have taken the new one off in a different direction that no longer appeals to us, and I’m not sure they have found the market for the new one they thought was there.

  • avatar
    Steven Lang

    “What’s wrong with that? What am I going to do instead? Demonstrate my annoyance with the upsizing of the Corolla by buying a Cobalt? Somehow, that strikes me as reeeeally unlikely.”

    OK… let’s see. Civic, Mazda 3, Versa, Lancer, Rabbit, Fit, and the upcoming Astra to name a few alternatives. Toyota owners can easily go to Nissan and Honda in particular since they’re perceived by most folks as ‘Japanese’ alternatives.

    YOU may very well bite the status bullet and go down to a Yaris. Most folks don’t do that. They want to either move ‘up’ or get a comparable vehicle when it comes to their next car. These consumers can go to plenty of other automakers who can offer a comparable bang for the buck with a FAR LIGHTER AND MORE FUN TO DRIVE VEHICLE.

    Toyota has issues with this. They will need to address it. If they don’t address the current issues that many Scion AND Toyota buyers have with the excessive heft and numb handling within the next few years, they will lose a lot of valuable and once loyal customers.

  • avatar
    umterp85

    StevenLang: “Toyota has issues with this. They will need to address it. If they don’t address the current issues that many Scion AND Toyota buyers have with the excessive heft and numb handling within the next few years, they will lose a lot of valuable and once loyal customers”

    Could not agree more. As I have said—Toyota is trading more on goodwill than superior product. At some point this will catch up with them if they don’t address it. Unlike GM & Ford who pushed out crap for years because they had little competitive incentive not to—–Toyota has alot of competitors waiting in the wings to eat their lunch if they continue to produce uninspiring cars.

  • avatar
    casper00

    Steven Lang: Remember during those time Toyota was pretty new to the US market, american were still use to the domestic vehicle. During those time toyota was experimenting, and you are correct cars like the paseo, tercel, mr2 and supra didn’t do as well but toyota found out what the people wanted. You see the difference here Toyota give the consumers what they want, GM, Ford and Chrysler is relaying on loyalist to keep buying their vehicles with out giving them what they want. So back to the article seems like every year toyota makes a small improvement to the tundra whether it’s horsepower, torque or design, it will win the consumers over.

  • avatar
    RobertSD

    casper – Your claim that the Big 2.5 are relying on their loyalists to offload vehicles that consumers don’t want is a very unfounded claim at this point. The conquest rates for the Edge and Fusion as two examples have been over 40%. The CTS is about 50%. There are, in fact, products that people want. Just because you do not want them (or are blinded by dislike of the makes in general) does not mean that Ford and GM (I’ll leave Chrysler out of this) don’t make products that many people do want. And yes, they rely on probably 75-80% of their overall sales going to loyalists.

    However, just like Ford and GM, Toyota is relying on loyalists for the bulk of their volume in most of their line-up. Do you honestly think the Corolla offers anything that would convince someone to choose it over a Civic – or even an Elantra? Not the new Focus either (unless you don’t like the car’s looks, myself included). The 2009 Corolla will retain its basic shape, a 12 year old platform, a 4-speed automatic and rear drum brakes – things Ford was derided for with the new Focus, but which I’m sure we’ll claim is Toyota building what people want.

    No, Toyota, in my opinion, despite their rhetoric of continual improvement and cars that people want is coasting on loyalty and goodwill right now. And it will run out, especially now that the marketplace is far more competitive than we’ve ever seen it.

  • avatar
    GS650G

    I do not believe Toyota can differentiate on these qualities anymore and the brand is now chugging primarily on years of goodwill that has translated into loyalty (it certainly isn’t on styling, performance, or materials quality)

    This is my case,, I looked at their cars for the first time when I was in the market. I did not have the Toyota complex going for me, I saw them for what they are and that is a decent car but not especially great in any one area. ultimately I did not car for the look or feel of the cars. I realize I sacrificed great resale and all that but we should buy cars we like and can afford. I didn’t like their cars and they were more expensive


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