Toyota Changing Production Mix to Favor Pickups, SUVs
Toyota responds to market demands as high-riding vehicles become increasingly popular
Toyota is making plans to restructure the balance of its car and truck production in the coming years. Reports suggest Toyota’s current 50/50 mix of cars to truck sales will soon swing toward the truck side, perhaps as much as 60/40. Toyota’s trucks, which include the Tacoma, Tundra, and the handful of SUVs and crossovers, have seen a dramatic rise in popularity over recent years. This plan will supposedly reallocate production volumes to favor these hot-selling vehicles.
The news comes from Automotive News who interviewed Bill Fay, the general manager of the Toyota division. "It’s not always that Toyota has a product that will stand out in the market," Fay said. “But we’re optimistic based on the feedback we’ve gotten so far." Fay is referring to Toyota’s all-new C-HR crossover that launched at the 2016 Los Angeles Auto Show in November.
The C-HR’s debut comes on the heels of big sales gains for Toyota’s RAV4 and Highlander. To help meet demand, Toyota is increasing the volume of RAV4s from Japan, while a newly opened assembly line in Indiana now rolls out Highlanders.
"I’m very optimistic for 2017 because we’ll have a better supply of RAV and Highlander," he said. "We’ll launch this beautiful C-HR and will be in a much better position to meet customer demand on the sport-utility side of things."
As far as Toyota’s trucks are concerned, the situation could be better. Both the Tijuana, Mexico and San Antonio, Texas assembly plants that produce the Tacoma are already at full capacity. An expansion project is already happening in Tijuana, but it won’t be operational for another year or so. That leaves a big void in supply.
Things will get even more hectic whenever Toyota launches its next-generation Tundra. The current Tundra is showing its age, but a new model with more modern and competitive features would surely see an increase in sales. Thankfully for Toyota’s production arm, the new Tundra isn’t expected until 2018 or 2019, giving time for Tijuana to complete its growth.
Fay voiced his thankfulness over production line workers not having to be laid off on the car side due to slowing sales of sedans and other small cars. "We’ve been able to move the production around in a way that we haven’t needed to lay anyone off, which is good," Fay told AN. General Motors workers weren’t so lucky as some 2,000 worker were sent home due to slumping car sales.
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Why It Matters
The industry is certainly seeing a huge up-tick in truck, SUV, and crossover sales as fuel prices continue to fall and the economy continues to recover from the recession. Families are buying bigger, thirstier vehicles while leaving models like the Toyota Prius and Corolla sitting on dealer lots.
Toyota is definitely wise in following market demands, though we hope fuel prices stay stable. A dramatic increase in oil prices would send customers shopping for hybrids and smaller cars, while dealerships would have stockpiles of trucks and SUVs. The industry has already experienced a very similar circumstance before, just as fuel prices spiked in the late 2000s.
While moving production towards SUVs, crossovers, and pickups is a risk, the potential for reward is great. These vehicles typically have a higher MSRP, which leads to higher profits for automakers. Vehicle production is important, but the main reason automakers are in business is to make money. Profits will always be the main goal.
Read our full review on the 2017 Toyota C-HR here.
Source: Automotive News