HiLux's uphill battle

There are many words one might use to describe Toyota and its products. 'Besieged' isn't typically one of those words. The company's HiLux pick-up isn't exactly besieged by competitors, but its sales leadership in the segment is being challenged on several fronts.

Volkswagen's Amarok is an unknown quantity in the market, but bearing the badge of the company that has vowed to overtake Toyota for global sales, the South American-sourced pick-up cannot be underestimated. The Volkswagen brand is generally well regarded in the Australian market and is aggressively working to increase its local market share.

Ford and Mazda recently announced their respective Ranger and BT-50 models, which reportedly mark a major advance on the current models wearing those nameplates. The new models are closer in size to the HiLux and will offer formidable specifications and equipment.

Perhaps the rival to the HiLux that's best understood by the market is the Nissan Navara, which is stealing private-buyer and small-business sales from the Toyota in the lucrative dual-cab 4x4 niche. Nissan has already upgraded the Navara ST-X variant this year and the importer will upgrade the entire model range for retail sale early next year.

At that time (January 2011) it will introduce the V9X turbodiesel V6 in the ST-X 550 variant. The Navara has stolen a march on the HiLux, outgunning the Toyota with its 3000kg towing capacity. Plus Nissan has added safety equipment to the Navara's specification to overtake the HiLux, but Toyota has now regained ground with a facelifted model, featuring extra safety gear.

With the new or improved challengers hitting the market within the next 12 months, increased market share can come principally from just the one source -- existing HiLux sales. HiLux sells as many as 4000 units a month and it's the model that could yield the most conquests. Toyota's senior executive director of sales and marketing, David Buttner acknowledges that the HiLux is currently beset by competitors that have the Toyota's measure.

"That segment in the market place -- which for years we dominated and we've still got very, very strong share -- our competitors now also offer very competitive product, very well specified. And in some cases frankly, their specifications are surpassing some of ours in terms of towing capacity and those types of things.

"You can't just sit back nonchalantly and accept that... and nor can you just sit back and wait until your next model change."

That's why the company introduces enhancements with each new model year, to keep the vehicle reasonably fresh right up to the point when it's replaced by an altogether new model. There's a major facelift for the HiLux due sometime next year, likely the second half given the timing of the latest upgrade.

"We've just gone through a minor technical change," Buttner continued. "Next year will be a big change... and that will help us -- in the areas of specification and styling aspects -- to get us through to the next generation, because the model life cycle of those commercial vehicles now is longer than it used to be. And that's just to do with amortising your cost over a period of time.

"While our competitors now... are at the peak of their next-generation model cycle, we're halfway through ours, so you have to keep doing things, like this technical change, special editions... still got to continue to offer value for money in the marketplace.

"HiLux, as to that total segment, benefited significantly from the government stimulus package and the investment allowance -- particularly for a lot of trades people or business people, who would have pulled forward their purchase to get that advantage of that investment allowance, so we have to keep the private customer stimulated and we have to ensure we're still competitive in that segment. Our pricing allows us to be competitive, we've got great residual values, but we're not sitting down and waiting for others to catch up."

Fittingly for a one-tonne commercial vehicle, the HiLux bears a name that carries a lot of weight, as does the Toyota reputation that goes with it. But some buyers may frown upon the HiLux as the segment's tall poppy and feel that it's stuck in a marketing rut -- its redoubtable offroad ability notwithstanding. Those buyers looking for something different from the default choice may settle for one of the challengers, rather than the sales leader. So who holds the advantage currently, we asked Buttner, the king or the challengers?

"That's not just limited to HiLux, for us," Buttner replied. "Because we compete in 16 segments in the market... and none of our competitors compete in that number of segments, so we're getting attacked from a whole host of competitors, whether it be in small, compact or medium SUV... we're being attacked the whole time. And it's a challenge to have that 360-degree vision the whole time and always having the response required, at the appropriate time to keep ahead of the pack. We respect every competitor, we understand every new product that comes to the marketplace; we drive it, we have review days. But sometimes, with a new model cycle, there's only so much you can do.

"There will be times... when you may not be aligned with the marketplace, in terms of your specification and your pricing, but that's the nature of the model cycles. While others are at their peak, we will be at our peak again -- starting with a new major model cycle across our whole range... last quarter of next year...

"Over the next 18 months to two years, we will be back at our peak again. History shows us... the last time we had a huge model peak was 2007; we had seven new-generation cars launched that year -- and that's worth anywhere between two to five per cent market points.

"So at the moment, while being in the middle, we've lost about 0.7 [per cent] share this year, versus last year, but we're starting to bounce back with some campaigns we've just launched [in] the smaller, compact segments. HiLux we've put additional specification in without adding to the price -- in fact lowering the price. Kluger, we've added spec and been able to reposition the price as well, for value for money.

"One strength we do still have is the loyalty of our customers... we have to make sure through our dealer network that we [are] customer-centric in everything we do.

"If you remain customer-centric, keep offering products while understanding you won't always be the leader in every instance at any particular point in time, but just keep striving for excellence -- and that's what we try diligently to do, working with Japan in terms of future-generation product.

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