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Toyota counts on growth amid cooler market

Strength in numbers: Toyota is relying heavily on SUVs such as the C-HR crossover to offset falling passenger-car sales and keep the market-leading brand in a positive growth position.

Market slowdown, manufacturing exit no hindrance to ongoing growth for Toyota

14 Aug 2018

TOYOTA Australia is confident it will continue to grow its new-vehicle sales this year, despite its exit from local manufacturing last October and a strong southerly breeze that now sees the overall market cooling off. 
In an interview with GoAuto at the launch of the all-new Corolla in Queensland last week – a crucial model that the company is simply hoping will maintain its current reduced volume – Toyota Australia vice-president of sales and marketing Sean Hanley said he expected the market-leading brand, which is currently up 1.4 per cent, to post more than the 216,566 sales recorded in 2017. 
This would mark Toyota’s highest tally since at least 2012 – and could end up as its best result in a decade, sending it beyond 220,000 units for the first time since 2008.
Toyota’s massive share of the national market is also expected to increase beyond the 18.2 per cent it achieved last year as overall industry sales start to contract and key rivals such as Mazda, Hyundai, Ford, Nissan and, most strikingly, Holden all find themselves in negative positions as at the end of July.
“I’d like to think we could get some marginal growth on last year, which I think would be a fantastic result given all the changes we’ve had,” Mr Hanley said. 
“You know, the consolidation of sales and marketing from Sydney to Melbourne, the closure of manufacturing, the bringing of a whole new team together in Melbourne. 
“We went into this year and we said, when we were planning, if we could just sell one extra car in that first year we’d be happy. 
“I’ll think we’ll do better than that.”
Mr Hanley said he expected the new-vehicle market to remain strong but pointed to cooling consumer confidence in the housing market as an indicator of why car industry sales are down 0.2 per cent for the year to date after taking a 7.8 per cent hit in July.
“I watch that very carefully,” he said. “I always think two things are lead indicators in the car market: housing market trends and employment.
“While unemployment is relatively low and stable – which is fantastic for our country – I think banks are tightening up on loans and, understandably, they’re taking a more cautious approach with … more scrutiny of different types of lending practices. 
“It’s tightening everything up. I think we’re seeing that in the housing market and I think possibly that’s having an impact on the car market.
“I don’t see this as long term. I’m very optimistic. I think the market will still be strong this year – up around 1.2 (million units).”
Mr Hanley said he did not believe the Australian new-vehicle market had reached saturation point, but warned that the industry was moving into “a challenging time” with mandatory CO2 targets and others issues looming.
“I believe Toyota is well planned for that time,” he said. “We remain really confident about the next 10 years in the Australian market. We want to continue growing. You know, market leadership is an outcome, it’s not a plan. 
“We just want to continue growing sustainably, and we want to genuinely contribute to the community by reducing our CO2 footprint. But I’m optimistic; I still think we’ll be alright.”
Toyota is banking on the continued strong sales performance of its top-selling HiLux ute and its various entrants in the booming SUV sector – C-HR, RAV4, Kluger, Prado, Fortuner and LandCruiser, all of which are in positive territory this year – to offset lower passenger-car sales.
On the latter, Camry has fallen 37.4 per cent this year with the switch to a new imported generation – a result Mr Hanley said remains above expectations – while Corolla is down 4.1 per cent. 
Mr Hanley said Toyota would not allow Corolla to lose its position as the nation’s number-one-selling passenger car, but conceded that “given the market segment is in some decline, I think if we can hold our own, that will be significant”.
“I’d hope we’d sell as many as we are currently,” he said. “In this market, that would be a significantly good outcome. I think we’ll hold any decline, and maybe see some small growth, but it won’t be significant.
“SUVs and light-commercial utes are certainly on fire, and I don’t think that trend is going to change any time soon. We’re not seeing that in our own forecasting, so our goal with this new-generation Corolla is to maintain its current level of volume … with maybe some growth in year one ... but we recognise that it’s a difficult segment that is in decline.”
Asked to explain why Toyota was growing its sales and market share when many of its rivals were going backwards – and how it could be so far ahead of every other brand in outright terms – Mr Hanley pointed to product, customer service and community engagement.
“Product plays a huge role, and with such a broad range, now that we’ve really got this hybrid offensive going, it’s broadened our range even further,” he said.
“So it’s kind of new, it’s exciting, we now hear words about Toyota like ‘innovative’ and, you know, it’s pretty strong, so product definitely plays a role.
“The other thing that we’ve done in the last five years is we’ve had an incredible focus on what we call ‘quality sales’. 
“Quality sales focuses all your attention on the guest, our customers. How can we improve the way they buy a car? How can we improve the way we service a car? How can we improve the whole relationship well after they’ve bought a car? 
“We had a program called ‘Toyota for Life’ that we launched to our dealers five years ago. Now, it’s a journey, we’re still on it, and we’re by no means at the end of it, but we made significant changes that our dealer network and we agreed on – on how we service the customer, how we communicate with our guests, how we dress, how we present ourselves. 
“We went down to the nth level of detail. And that’s played a role in our growth in recent years. 
“We’ve also looked at our service package availabilities. We’ve got ‘Toyota Service Advantage’ and on Corolla, for example, we’ve just expanded the intervals to one year/15,000km, five services at $175,” he said.
“That’s wonderful value, and that encourages our customers to keep coming back to Toyota over the next five years. So we’re doing it in the right way. And we’re giving value.
“The fourth thing that we’re doing is we have a lot of community activity, we’re very committed to a number of community activities around Australia that we’re involved with, whether it be ‘Good for Footy’ through football or our various sponsorships. 
“And I think, above all, we also sat down when we decided on the transition from Sydney to Melbourne and the closure of manufacturing, we didn’t only develop a plan for that three-year notice period, we carefully developed a plan 10 years out from there. 
“So we are looking very much into the future.
“All those things are contributing to our ability to grow.”

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