Toyota sees chance as sedan rivals drop out

DALLAS — Toyota is treating plummeting U.S. car sales as an opportunity, not as a worrisome trend threatening one of its biggest strengths.

As light-truck sales began to surge several years ago, Toyota executives scrambled to meet crossover demand even as they suggested that car sales were stabilizing.

The same thing happened last year as the mix tilted even further. But even with the market approaching a 70-30 split in favor of crossovers, SUVs and pickups, Toyota still sees cars as core to its identity. It has spent billions of dollars overhauling its sedans and hatches — and making sure its franchise player, the Camry, remains No. 1.

“We’re always going to have a little bit of a bias relative to industry numbers towards passenger cars, whether it’s Prius, whether it’s Corolla, whether it’s [Lexus] ES,” said Jim Lentz, CEO of Toyota Motor North America.

“We think we have a competitive advantage in things like hybrids. So we think we’re always going to be able to provide a value proposition to the customer in passenger cars, and as a result hopefully get a big share,” Lentz told Automotive News.

Analysts point out that Toyota’s car bias is directly linked to its global footprint and its DNA.

While the Ford F series was the world’s best-selling vehicle through April of this year thanks to U.S. sales, the Corolla came in a close second due to gains in China, according to the JATO consultancy.

Lentz emphasized that Toyota will remain a “full-line manufacturer” even as some competitors throw in the towel. “If you look at some of the really critical segments — midsize passenger car, compact passenger car — those are [almost] 2-million-plus-a-year segments, so we have no desire to back out of segments,” he said in a May interview.

Toyota executives have argued that U.S. consumers are leaving sedans in part because the cars haven’t been getting the investment they need to remain attractive. They point to the higher sales of the redesigned 2018 Camry as proof.

The Camry's share has risen 5 percentage points this year vs. the first five months of 2018, Lentz said. "We actually have people waiting in line to get two-tone XSE [trims]. When was the last time somebody waited in line for a midsize passenger car? It's been a while."

As rivals pare their car offerings, Toyota will be waiting in the wings.

At the same time, Toyota realizes the importance of meeting demand for light trucks after getting caught flat-footed with too many cars and not enough crossovers or pickups.

After moving the Prius, Camry, Avalon and Corolla hatchback to new unibody architectures, it’s now focused on crossovers such as the 2017 utility-vehicle sales champ, the RAV4, which is getting big changes when its next generation arrives in December.

Jack Hollis, general manager of the Toyota brand in the U.S., sees the redesigned RAV4 as part of a growing family. There’s a beefier all-wheel-drive version and a repositioned sporty hybrid.

The new platform, a version of the Toyota New Global Architecture, could be stretched into a niche segment based on the FT-AC concept from last year.

Perhaps even more radical for conservative Toyota, it’s finally making a bigger bet on pickup trucks. It has added capacity for the Tacoma midsize pickup at a plant in Baja California, Mexico, and is building a Tacoma plant in central Mexico. That also will free up capacity for the full-size Tundra.

But the combined volume of the Tundra and segment-leading Tacoma still lags the crown jewel of Toyota’s U.S. lineup: the seemingly unbeatable, unflappable Camry. Camry sales rose 2 percent in the first five months of this year. It’s the only one of the 10 top-selling midsize cars to post an increase in 2018.

The rest of the segment is down 21 percent.