Against the backdrop that Toyota’s
European sales are on the increase, that it is increasing car production
in Europe and that it is on the verge of launching its new mini car in
a joint venture with PSA Peugeot Citroën, William Kimberley spoke
to Tadashi Arashima, president and CEO of Toyota Motor Marketing Europe
at the Mondial de l’Automobile in Paris.
"I do believe that whether
or not it is wanted by the customer, it is the carmaker’s
fundamental duty to offer as clean a technology as possible
to protect the globe," Arashima |
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While there has been some doom and gloom in the motor industry of late,
especially with the news coming out of Europe and North America of late
where the carmakers are fighting tooth and nail for every sale, one of
the bright spots has been Toyota. Already making news this year for claiming
the number two spot from Ford in terms of global sales, although it is
already the world’s number one in terms of market capitalisation,
worth more than General Motors, Ford, the Volkswagen Group, DaimlerChrysler,
PSA Peugeot Citroën and Hyundai Motor put together, it used the Mondial
de l’Europe in Paris to say that it was raising its European sales
target from 860,000 units to over 900,000 units. Last year, it sold 835,000
in Europe.
One of the people most responsible for this is Tadashi Arashima, a Toyota
man through-and-through who has been with the company since 1973, 22 of
which have been focused on the North American market. It is with this
background that he now heads up the European marketing operation.
“I spent 22 years in the North American operations of which 10 years
were in the US and 12 in the Tokyo office so I know a great deal about
the market there,” says Arashima, “and what I see makes me
believe that Europe is about 20 years behind as far as Toyota is concerned.
However, I do appreciate that the market here is quite different and much
more fierce and that it is not easy to increase market share.
“However, we do still expect to beat the 900,000 sales target this
year meaning that Toyota will enjoy its eighth consecutive year of record
sales in Europe. Much of this success is down to our expanding manufacturing
network and capacity in Europe that plays a key role in ensuring our continued
growth.”
Toyota currently has eight manufacturing plants in six different countries
Europe including its small car venture with PSA Peugeot Citroen in Kolin
in the Czech Republic. Between them have a maximum vehicle production
capacity of 675,000 units although in 2004 they will be building 565,000
vehicles between them, a 21 per cent increase compared to last year.
These plants include the Burnaston plant in the UK where the Corolla and
Avensis models are made. It has recently received a €100 million
boost to expand its production capacity to 280,000 units.
The engine manufacturing plant in Deeside, North Wales manufactures 1.4,
1.6 and 1.8 litre petrol engines and 2.0 litre diesel engines for vehicles
manufactured in the Burnaston plant, and parts for engine assembly at
the French and Turkish plants and other plants worldwide.
There is the plant in Valenciennes in France which in May this year went
to three shifts in order to meet demand for the Yaris, production capacity
increasing from 184,000 to 210,000 units. The neighbouring engine plant
assembles approximately 184,000 1.0 and 1.3 petrol engines and 1.4 litre
diesels.
There is Toyota’s Polish plant in Walbrzych that currently manufactures
manual transmissions for export to the UK, France and Turkey. It currently
has a current annual capacity of 250,000 units but is due to expand to
550,000 manual transmissions and 250,000 1.0 litre petrol engines by 2005.
Another plant is under construction in the country with production scheduled
for 2005 for the manufacture of 150,000 2.0 litre diesel engines.
In Portugal, the Toyota Dyna, Hiace and Optimo models are produced under
licence in co-operation with Salvador Caetano while a plant in Adapazari,
Turkey produces 140,000 Corolla Verso MPVs, saloons and estates.
Toyota is therefore geared up for meeting expected European sales for
the time being, but the one thing it lacks, which it has had in the US,
is a steady best seller. Arashima, though, is not concerned about that.
“In the Yaris we have a very popular car which last year sold more
than 220,000 units which I think is a fairly good volume. Although we
are unlikely to reach the same sort of volumes as, for example, the Peugeot
206 we have come a long way since the Yaris was launched in 1999. Before
then we only had the Starlet which sold around 50,000 a year so we had
no customer base on which to build. Now, though, we have managed to take
away customers from other brands that means that we now have many first
time buyers that has given us a good sales base for new models, including
the new-generation Yaris.”
And, of course, the new small car jointly developed with PSA Peugeot Citroën
is going to help when it goes on sales next year. “We will be taking
100,000 of these small cars a year which will take us closer to out 2010
challenge of selling 1.2 million in annual sales in Europe.”
One car that will not match this sort of volumes but which nonetheless
is increasing its sales is the Prius. After a shaky start in Europe, where
it was nothing like as popular as it was in Japan or the US, Toyota’s
hybrid model is finally being recognised for what it is.
“The first version Prius was very difficult to sell in Europe with
only 1,500 being sold,” admits Arashima, “so we set the target
of selling 5,000 units a year in Europe. However, such has been the customer
interest in the new version that we look like selling 12,000 units a year.
We are going to sell 8,300 this year which means that some customers are
going to have to wait around four or five months to take delivery. We
have already increased the production capacity from 7,500 to 10,000 units
a month and from next spring we will be producing 15,000 units a month.
More cars will be coming to Europe as well so I expect we could be selling
between 12,000 and 15,000 cars next year. So it is slowly but steadily
increasing. In some countries there are some kind of tax incentives and
we are daily growing more confident about it and so it will be joined
in Europe by the hybrid Lexus RX400h.”
Asked whether Toyota customers really do care about the company’s
environmental profile, Arashima is quick to defend it. “It depends
on the customer,” he replies. “Some are environmentally aware
but it does tend to vary from the northern to the southern parts of Europe.
However, I do believe that whether or not it is wanted by the customer,
it is the carmaker’s fundamental duty to offer as clean a technology
as possible to protect the globe.”
One of the quandaries is Lexus, which has been very successful in the
US in its short life there, but far less so in Europe, where its annual
sales amount to around 20,000 units a year, accounting for around one
per cent of the luxury segment in the European car market. However, Arashima
is not concerned.
“The American car buyer tends to be more open to any brand while
Europeans tends to have more loyalty to their favourite brand although
I think the British are a bit more like the Americans in this respect.
“My experience from North America, where I was part of the team
responsible for launching the Lexus onto the market there, is that at
that time of its introduction in 1989, Toyota was selling around one million
units there, and this is comparable to what is happening in Europe right
now. We got feedback from our Camry and Corolla drivers about what they
liked and what they expected to move to and when they told us that they
were looking at Mercedes and BMWs as their next choice, we decided to
produce the Lexus.”
The result was that within two years after its introduction, Lexus was
outselling both BMW and Mercedes-Benz, a position it has continued to
this day despite much stronger products coming from the two German carmakers.
Last year, for example, Lexus saw its sales increase to 260,000 units,
a 11 per cent year on year increase, easily outstripping its rivals.
Toyota now plans to increase the availability of four models in Europe
quite dramatically, including the LS430 and RX300, with a priority on
introducing diesel versions. Sales in the UK alone are projected at 10,000
units this year, or 40 per cent of total sales, with a doubling of this
figure being quite achievable once diesel models become available. The
big challenge, though, is Germany where sales of Lexus models totalled
just 2,360 units last year. If the sales of Toyota models are anything
to go by, then the omens are good for with strong sales of the Corolla
and the Avensis, the Japanese carmaker was the only carmaker to grow in
the country with sale up by 19 per cent.
Europe is important to Lexus, for how it does in the region is likely
to affect the release of new models in Japan as the brand is being introduced
into the country next August with sales projected at 50,000 to 60,000
units a year.
Asked whether Toyota benefits from its racing programme, Arashima is coy
about telling anyone about the true cost of its racing programme, especially
its Grand Prix team which is based in Germany, but goes on to say how
useful it is as a marketing tool.
“We don’t state how much we spend on our racing programmes,”
says Arashima, “but it is an important promotional tool in changing
our image from being a company producing very good quality but dull and
conservative cars to one that is more sporty, aggressive and young.”
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