Toyota will focus on a handful of core models as it attempts to grow in Europe.
Toyota cannot compete in Europe as it does in Japan where it sells a wide range of models and variants, said Thierry Dombreval, Toyota Motor Europe's senior vice president for sales and marketing.
Toyota has a 4.5 percent market share in Europe. Its share is 10 times higher in Japan.
Dombreval was Renault's head of strategy and marketing before joining Toyota earlier this year. He is now charged with meeting Toyota's ambitious target of boosting sales 46 percent to 800,000 vehicles a year in Europe by 2005.
"The strategy has to be very different," said the 55-year-old Dombreval, "Here we have to focus on a few models: the Corolla, Yaris, Avensis and RAV4."
At the same time, Toyota is devising ways to sell more of its luxury Lexus brand in continental Europe. It sold 24,000 Lexus models last year in Europe, nearly half in the UK.
"The challenge is to replicate Lexus' UK success in Germany, France, Italy and Spain," he said.
For one, Toyota plans to make diesels available for Lexus models, although Dombreval didn't say when.
Lexus performs poorly in Europe compared with the USA, where it outsells domestic marques Cadillac and Lincoln and all other import luxury brands. Lexus sold 224,000 units in the USA last year.
Dombreval believes Lexus' profile will improve in Europe as more people become aware of the brand's success in the USA.
"To launch a luxury brand from scratch in Europe would mean investing E50 million a year for 10 years," he said.
Dombreval even believes the corporate goal of reaching 800,000 European sales a year can be attained a year earlier than planned, by 2004.
Toyota will be helped by a new generation of European buyers who are less nationalistic than their elders and have fewer qualms about buying Japanese cars, he said.
"Our main target is the 35- to 45-year-old group," he said.
Dombreval is not sure how aware European buyers are of Toyota's European assembly plants in France, the UK, Portugal and Turkey. But the fact that Toyota has localized production "certainly creates a positive climate," he said.
A European design more directly helps sales, Dombreval added. Toyota is learning to build cars, such as the Yaris supermini, that appeal to European tastes, he said.
That includes cars with wider tires and a more aggressive-looking stance; stiffer brakes and suspensions; engines tuned for brisk performance; and bodywork with a solid and substantial feel.
* Dombreval said the European Commission's plans to revise new-car distribution would not fundamentally change Toyota's sales operations in the region. Toyota uses a European network of 3,300 dealers including east European countries such as Poland, the Czech Republic and Hungary.
Toyota wants to improve its sales network by creating powerful dealerships, selling at least 700 cars a year. Dombreval sees that number as a critical threshold for achieving economies of scale.
"We see more and more candidates coming to us," he said.
Dombreval declined to say which brands those dealers represent, except that Nissan dealers were not in the mix.
"They are too small," he said.
Toyota's network restructuring is in progress in Germany and France and nearly done in the UK and Italy, he said.
* Toyota has avoided the intense lobbying that European carmakers and their trade association ACEA have mounted against the Commission's new-car distribution proposals.
Dombreval noted that Toyota's applications to join ACEA have been rejected. But he believes that measures such as allowing suppliers to directly sell spare parts to dealers are likely to squeeze carmaker and dealer profit margins further.
"It is essential to reduce costs even further," he said.
* The small car that Toyota is developing with PSA/Peugeot-Citroen to be built in the Czech Republic will not be a downmarket product, Dombreval said.
"It will be rather sophisticated and very well equipped," he said. "It will be designed to last. It won't be like [Volkswagen's] New Beetle."
The car will target urban families who own several cars.
"I can see that car with aluminum wheels and leather upholstery in London's smartest areas," he said.
* How does it feel to work for Toyota after Renault? Dombreval said he enjoys Toyota's "conquering" spirit.
"European carmakers are on the defensive, I think they've reached a plateau in terms of market share," said Dombreval. "They are leading a trench war."