Car-heavy Toyota takes comfort in breadth of its lineup

One year ago, Toyota swaggered into the Detroit auto show promising a redesigned Camry with enough style and performance to defy the notion that sedans are becoming irrelevant.

With the Camry finishing 2017 strong on record December sales, Toyota backed up that talk a bit.

"Great products still sell, so we still feel really confident in the car market," Jack Hollis, general manager of the Toyota Division, said on a conference call this month.

Expectations aren't as high for this year's Detroit debut of the next-generation Avalon, which is based on the midsize Camry and built on the same line in Kentucky. The Avalon lives in a far less potent segment — full-size cars as a segment barely outsold the Camry in 2017 — and its family-size proportions make it more vulnerable to conquest by crossovers.

In the full-size car segment, "Often, that buyer is moving family around, and they have a tendency now to go with a utility vehicle," said Stephanie Brinley, an analyst at IHS Markit.

In fact, the Camry and other iconic cars in their segments, such as the Honda Civic, may be outliers rather than trendsetters in their ability to maintain sales amid a steady stream of new crossovers. And that's a problem Toyota is taking seriously, even as it fields one of the industry's broadest assortments of car models, including a family of Priuses and a trio of leftover Scion models.

Toyota got caught two years ago with too many cars and not enough compact and midsize crossovers before realigning production in 2017. The same was true at its Lexus luxury division.

Toyota introduced its first subcompact crossover, the C-HR, last spring and showed three crossover concepts last year in a sign of the direction it's moving. The RAV4 is holding its own as the nation's top-selling crossover and soon will have more production capacity available at the Cambridge, Ontario, plant.

Toyota's next car to be redesigned, the compact Corolla, will be assembled at a new joint-venture plant with Mazda. The automakers announced last week that they've chosen a site in the Huntsville, Ala., area.

Toyota's half of the operation will produce about 150,000 Corollas a year — not in added production, but output that's moving from the Canadian plant to make room for more RAV4s.

The rebalancing act has left Jim Lentz, Toyota's North American CEO, satisfied with the automaker's capacity in the region and its trajectory as the market continues to shift toward light trucks.

"If I would be nervous at all, it could be on the passenger-car side with nothing but sedans in Kentucky, so we've got to watch that," Lentz said during an interview late last year. The Georgetown, Ky., plant produces the Camry, the Avalon and the Lexus ES.

As for the Avalon, its best hopes may lie in the slow withering of the segment. Among other makers of large sedans, Chevrolet is unlikely to extend the Impala to an 11th generation; Hyundai has discontinued the Azera; and Ford is widely expected to cut the Taurus from its North American lineup.

U.S. sales of full-size cars were down 11 percent last year, with little sign of an upturn. That means the Avalon stands to gain only a larger slice of a shrinking pie. But that's not nothing.

"Automakers that have a good position within the sedan size and are making money, it's a lot easier for them to stick it out and be the last ones standing," said Mark Wakefield, an industry consultant at AlixPartners.

Matt DeLorenzo, managing editor at Kelley Blue Book, thinks the minivan market may be a good example of where cars are going. As competitors leave, survivors can settle in more comfortably — and profitably.

"There's only four or five players left in that [minivan] segment, and they're all able to make good money," DeLorenzo said.

Toyota executives like where they stand. With C-HR sales gathering steam and the expansion of Tacoma pickup production capacity in Mexico underway, Lentz said, the brand has a broad selection of vehicles on the car side and the light-truck side to keep buyers happy.

"In the end," he said, "customers are coming in to buy Toyota products and leaving with Toyota products, so it's working out."