Toyota: Where to now?

The closure of Toyota’s local production lines will not impact on the company’s position as number one. Indeed, it’s business as usual, says the company’s local executives – even with a major move of headquarters and facing a massive staff turnover.

Toyota officially shut down its Altona (Vic) production lines this week. Before the end of 2017, it will move its entire head office operation to Melbourne, reduce its workforce from 3900 to 1300 and almost entirely replace its senior leadership team.

Yet the man who will head up the new-look operation, President and CEO elect Matt Callachor, believes that the company is well positioned for transition.

Callachor is a 35-year Toyota veteran. He will replace long-time chairman Max Yasuda, as the most senior executive at Toyota Australia when it becomes a national sales, marketing and distribution company.

Also leaving the company at the end of 2017 will be current president Dave Buttner, executive director of sales and marketing Tony Cramb and executive director of manufacturing and purchasing, Chris Harrod.

Callachor, Yasuda, Buttner and Cramb hosted a round table with the Australian automotive media last week in the lead-up to the Altona closure. There, the team detailed the steps the company had taken to ensure what it termed “a respectful transition” from its local manufacturing era.

But the focus was clearly on the future.

An upbeat Callochor told motoring.com.au that the company had examined the effect of the exit of local manufacturing on other companies but he was confident Toyota was well positioned to hold share and volume.

“We examine quite clearly, or carefully I should say, those local manufacturers that have left the country – in terms of the manufacturing…

“It’s fair to say the market share loss has been quite large… So, from our viewpoint, having actually analysed why that was the case, we've been able to develop strategies that we feel confident, basically, [that] will ensure us to have minimum 200,000 [unit sales] moving on,” Callahor stated.

The fact local manufactured models made up significantly less than one fifth of Toyota Australia’s volume is also a key difference to brands that have exited before, Callachor asserts.

“Our percentage of Camry sales within the total model mix is probably about 11 per cent. It’s not that big compared to some of those companies that have gone before in terms of their percentages, which were up to 40-50 per cent,” he proffered.

Camry sales will not be entirely lost to the brand in the revamped Toyota Australia. The local line-up will retain a fully-imported Camry and Toyota has suggested it will seek to move the model upmarket. The removal of the need to constantly feed local volumes of Camrys through the system will also present opportunities to the brand

“So, yes, there will be a portion [lost] there in government [and fleet] sales, but the reality also is that… once we don’t have the factory there sitting in the backyard, it does give us the flexibility of many other options… and many other vehicle types to push right the way through,” Callachor explained.

But don’t expect significant changes to the rest of the line-up. Outgoing sales chief Cramb teased there are “one or two” other models on the wish-list but Callachor qualified the sentiments.

“I don’t think we actually need to extend the range further. We cover pretty much most segments as it is… But what it does give us the opportunity to do is to look at how we go to market with all those particular variants and what we talk to fleets [about], what we talk to consumers about,” he stated.

“We’re fortunate inside Toyota having such a large range of vehicles and I think you’ve got to also take into account that the overall market is moving towards vehicles such as SUVs… So we can take care of future customer preferences moving towards that as well…”

Toyota’s head office relocation from the southern suburbs of Sydney to Melbourne has largely been overshadowed by the production shutdown but it arguably has an even more significant impact on the local operation’s decision makers.

More than two-thirds of the staff will turn over. However, according to Callachor all but one of the roles within the company’s top three most senior levels will be filled from existing staff.

“They've been redeployed, or promoted and redeployed, from either other areas to move into senior roles. But they're highly experienced operators and have significant history inside TMCA,” Callachor explained.

A year down the track, Callachor asserts Toyota Australia will be a more nimble organisation thanks, in part, to the wholesale changes.

“Our inspiration is to make us more nimble, more flexible and basically all together with all of the benefits that you expect from one site consolidation.

“I was talking about 200,000 [sales per annum]. I don't see that changing at this particular point in time. All of our strategies lined up towards that.

“Some of the other components I can't really talk about in terms of our strategies… obviously it wouldn’t be good practice but I think we will be a very strong company moving forward.”