Holden departure would hurt Toyota

It will be “more difficult” for Toyota to survive as Australia’s only car manufacturer if Holden ceases production, a senior executive of the company’s Australian division has admitted today.

But Toyota Australia marketing and sales executive director Tony Cramb said maintaining export deals for the Altona-built Camry was even more crucial for the plant’s survival.

Speaking on the sidelines of the Tokyo motor show, Cramb was responding to comments made yesterday by global boss Akio Toyoda and Executive vice president Nobuyori Kodaira about the challenges for the company of continuing to build cars in Australia.

Kodaira spoke of the “difficult situation” for Toyota manufacturing in Australia and said he “hopes” Altona can continue. In a brief interview Toyoda said Altona needed to achieve “sustainable growth”.

Ford has already announced it is withdrawing from Australian manufacturing no later than October 2016 and Holden is in danger of finishing up around the same time. Toyota builds the Aurion and Camry sedans at Altona and exports more than 60 per cent of the volume, primarily to the Middle East.

“If Holden goes it [local manufacturing] becomes more difficult, putting it in Kodaira-san’s terms,” said Cramb. “That is not something we can control, it’s not something we can focus on or fix.

“All we can do is look at our own costs and our own business and work with the suppliers, work with the people within Toyota to improve our local competitiveness.

“We believe we can structure a long term sustainable business manufacturing cars in Australia.”

Toyota Australia faces two key and impending internal hurdles to continue manufacturing. First it has to fend off several other of the nine other Camry plants in a competitive bidding process conducted by TMC for the Middle East export deal.

“That’s an internal matter for TMC management here in Japan to decide. It’s always the subject of discussion,” Cramb said.

Then it must gain the green light from TMC to build the new generation Camry, which is due in 2018. That decision is due in the first half of 2014.

“The clear and present focus for us is to achieve the next generation Camry with export,” said Cramb. “If we can’t get export then we definitely can’t get the economies of scale that we need for our business.”

Cramb said Toyota Australia launched a business transformation program two years ago which was aimed at reining in cost and securing Altona into the long term.

It is seeking a $3800 cut in costs per car built, has announced retrenchments and a re-negotiation of its workplace agreement with the Altona workforce. It is also negotiating ongoing co-investment with the new Abbott federal government, but Cramb would not disclose details.

“Part of that $3800 has been achieved in our efforts up till now and we have a plan for another portion for that $3800 and then there is a gap at the end.

“The gap is what we are focussed on closing now,” Cramb said.

He said that winning the right to build another Camry generation was the current priority ahead of adding the third model line the company has been pursuing, thought to be the next generation RAV4 compact SUV.

Cramb said 2013 annual production of Altona would end up roughly level with 2012 at 104,000-105,000 units, an increase in exports accounting for a local sales dip. He confirmed the export business was not profitable at the moment and was being hurt by the high Aussie dollar.

“But Toyota doesn’t make long-term investment decisions based on the exchange rate this year,” Cramb said. “When the decision gets made by Toyota … they think about the long-term. They think about all of the variables involved in the business.”

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