Dealership inventory levels will remain at or near record lows for at least another year before they begin to make any recovery, and they may never return to previous levels that required sales incentives, said Jack Hollis, Toyota Motor North America's newly minted head of sales.
Speaking Thursday during an Automotive Press Association event, Hollis — who succeeded Bob Carter in the top sales role in June — said demand is continuing to outstrip automakers' abilities to produce enough vehicles to fill dealership lots.
"We're going to be dealing with this for one more year," said Hollis. "I do not believe we're going to see growing dealer stock for one more year. I think we're going to be in a situation, speaking for Toyota and Lexus, where whatever we wholesaled is what we'll retail."
Hollis said dealer inventories are likely to remain tight — he noted that Toyota dealerships have been down to a 36-hour supply at certain points recently — for the foreseeable future, but he said he doubted that any automaker would return to inventory practices that were commonplace before the pandemic.
"They just won't," Hollis declared, adding that the advent of widespread digital retailing tools has given consumers a level of comfort with ordering or buying vehicles that are still in transit or waiting to be assembled.
"It all comes back to what the customer is wanting and needing, and they're getting very used to an online experience," Hollis said. "The process of buying a car is different, even the pricing. Some of the highest customer satisfaction scores in the entire industry are occurring right now, and everyone's buying a vehicle at MSRP."
In other comments, Hollis reiterated Toyota's belief in offering a wide range of electrified vehicles — hybrids, plug-in hybrids, battery-electric vehicles and those powered by hydrogen fuel cells — as the best way to reduce overall carbon emissions. He expressed skepticism that consumers would adopt BEVs at anywhere near the pace that government goals have suggested.
"In my experience over 31 years in this industry, when government and others start telling consumers what they must have, consumers start to push back," Hollis said, adding that Toyota "may not move first, but it will move best."
The longtime Toyota executive also said that the 2023 Toyota bZ4X electric compact crossover, which was recalled and which Toyota issued a stop-sale order on after reports from Japan that its wheels could come off, will be back on sale shortly.
"We've been working on it each week," Hollis said. "I would expect we'll have them back in market here pretty soon," though he did not specify when. Toyota offered a series of make-goods, up to and including buying back the vehicle, after 260 bZ4Xs sold in the U.S. were recalled in June.
Hollis also was asked about his former co-worker, Jim Farley, who is now CEO of Ford Motor Co. Hollis and Farley worked closely during Toyota's Scion experiment.
"Jim is one of the most brilliant automotive guys I've ever had a chance to work with; truly, the guy is great," Hollis said. "He's definitely taken a page out of the Elon Musk school of creating chatter and creating information out there that may or may not come true and may or may not come true at the same timeline that is out there."
"But I'm going to tell you: The guy is brilliant, the guy is a great car guy, a great dude," Hollis continued, "But let me tell you: Some of the things that were said? We're still questioning it as well."