LOS ANGELES - Toyota Division has launched a full-scale attack on the domestic automakers' strongholds in light trucks.
The move began when the Sienna minivan arrived in 1997. It advanced with the Tundra full-sized pickup last year. And it will continue with the big Sequoia sport-utility this year.
These new Toyotas bump straight into the likes of Dodge's Caravan, Chevrolet's Silverado and Ford's Expedition. These three segments represent the heart of profits for DaimlerChrysler, General Motors and Ford Motor Co. They are now being challenged on almost every truck front by a competitor that has prospered in almost every segment in which it chooses to compete seriously.
About the only things holding Toyota back are a shortage of factory space and a concern that some products might hurt sales of others.
Trade tensions, a threat to Toyota's ambitions in the past, appear to be deeply buried - at least for now.
TRUCK SHARE RISES
Light trucks' share of all Toyota Division sales has soared from 27.9 percent in 1990 to 38.5 percent in 1999. That trend should continue. In 1999, after all, the Tundra was built only for a few months, and the Sequoia will begin contributing sales this year.
Toyota also is keeping the pressure on makers of small sport-utilities and compact pickups. Arriving later this year: A redesigned RAV4 sport-utility and Stepside and Double-Cab versions of the Tacoma compact pickup. Next year will see a Toyota-badged version of the successful Lexus RX 300 sport wagon.
'We're selling 40 percent trucks, and the market is 50 percent,' said Don Esmond, Toyota Division general manager. 'If we're not selling 50 percent trucks, then we're losing market share.'
Added Bruce Quisenberry, national manager for product planning for Toyota and Lexus divisions: 'We've been playing a bit of catch-up. But now Toyota's line is going to expand in different areas.'
To date, Toyota's trucks have sold better than anticipated, even factoring in the hot industry.
The Sienna was expected to sell 70,000 units a year; it nearly broke 100,000 last year. The RAV4's volume initially was pegged at 36,000; it tripled that last year. The Tundra, despite a deliberately slow production pace at the beginning, still reached nearly 43,000 sales in six months and is on pace to sell 100,000 annually. And the aging 4Runner and Tacoma combined blew past the 200,000 mark yet again. For the upcoming Sequoia, Toyota estimates 60,000 units. But as one analyst wryly noted, 'They can do that without even breathing hard. It all comes down to capacity.'
CHICKEN-AND-EGG PROBLEM
It was capacity - or lack of it- that prevented Toyota from getting into full-sized trucks sooner, Esmond noted.
It's the same chicken-and-egg dilemma faced by other import nameplates: The subsidiary needs to develop products that meet its needs. But the parent company won't cough up the resources to develop those products until the subsidiary proves it can sell enough of them.
In Toyota's case, its U.S. operations had little to say about truck development.
Toyota's first attempt at a big truck, the 1994 T100, was barely bigger than a Dodge Dakota mid-sized truck and lacked a V-8. It was a bust. And the Previa minivan, predecessor to the Sienna, failed on two of three fronts.
'We wanted front-drive, V-6 and walk-through capability,' Esmond said. 'We got rear-drive and a supercharged four.'
Finally, Toyota came through with the investment needed to build American truck plants. As a result, the U.S. operations had far more say in how the plants would be used.
'Full-sized trucks and sport-utilities are strictly an American phenomenon,' Esmond said. 'Until Toyota had the American production capacity, it was hard to rationalize getting into those segments. But now that we are responsible for production as well as sales, we have much more influence with the parent company to deliver products that the customer needs.'
He cited the Tundra's and Sequoia's V-8 as an example. 'It takes a huge investment to develop an eight-cylinder engine just for this market,' Esmond said. 'The parent company has to have confidence that you can sell it and sustain it.'
REFINEMENT, QUALITY
Said Quisenberry: 'Customers want a passenger car ride but don't want a Volvo wagon. We want to give them that sort of refinement and quality in a truck, and an incredible sound system.'
At the same time, Quisenberry worries about cannibalizing sales. Will people still pay more for the flagship Land Cruiser once the Sequoia, which is larger, arrives? Will Toyota's version of the RX 300 steal the 4Runner's thunder?
Doug Scott, president of West Coast operations for industry consultant Allison-Fisher Inc. in Gardena, Calif., said that Toyota and the other Japanese automakers gradually are eating away at the share of the truck market held by Ford, GM and DaimlerChrysler. He calls it an incremental onslaught.
'The Japanese are picking up the pace, and Toyota is leading that charge. As a consequence, there is more Japanese truck credibility, and there are more people who will slowly but surely reconsider the Japanese as truckmakers,' Scott said.
The first converts have been consumers who switched over to Japanese cars and compact pickups but returned to the full-sized domestic trucks, minivans and sport-utilities because there was no Japanese offering.
'Tundra will meet Toyota's objectives, and Sequoia will give them a beachhead,' Scott said. 'There are a lot of Japanese car owners who have put domestic trucks in their garage, and that will change.'
