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NEWS
Toyota's local future unclear
Plans for Toyota Australia's workforce up to 2017 are already known, but after that?Toyota Australia will outline its formal plans to end manufacturing before the end of the year. And the company is also expected to declare its hand for the post-2017 period, when it becomes a full line importer.
According to the company's Media and External Affairs Manager, Beck Angel, the decision to withhold this information was made to allow staff appropriate time for "grieving" in the months after Toyota revealed it would cease building cars here in 2017.
The upcoming announcement will be made "before the next Christmas break," she told motoring.com.au this morning. Of the 3900 employees at Toyota Australia, it's the 2500 building the Camry and Aurion at the Altona production plant (pictured) who will be "directly impacted," in Ms Angel's words.
But the announcement will also clarify what's in store for some of the 1400 Toyota employees who aren't tasked with building cars in Australia. It has already been revealed that staff cuts will affect TSA (Toyota Style Australia) and TTCAu (Toyota's Technical Centre in Notting Hill, east of Melbourne).
It's likely too that the announcement will presage the relocation of Toyota's head office – currently in Port Melbourne but possibly moving to Sydney – and the formal name of the company. At present it's Toyota Motor Corporation Australia (TMCA), but that is expected to change once the company migrates to full-line importation.
Should the name change to TMSA (Toyota Motor Sales Australia), it would mark a return to the good old days when Toyota Australia was a company divided in two. TMCA was responsible for passenger cars and the company originally established by Sir Leslie Thiess to import early LandCruisers became TMSA, distributing imported commercial vehicles and Hino trucks.
Another important aspect will be Toyota's public image after 2017. Toyota Australia's move from manufacturing to full-line importation is taking place as global chief Akio Toyoda wrests the juggernaut away from its current course building worthy-but-unfulfilling cars. There's an opportunity in that for Toyota to reposition its own brand in Australia – particularly once the mainstream Camry becomes an imported product.
The danger for Toyota is that it runs the risk of losing its colossal market leadership once manufacturing ends – and at an even greater risk if a new brand image actually deters loyal buyers, among them fleet managers.
Fleet sales are driven by price, by running costs, by reliability, but also to a degree, by loyalty to a company with a local manufacturing presence. Toyota has been heavily reliant on fleet sales for its winning margin – consistently selling above 200,000 cars in a one million-strong market. In year to date sales for 2014 Toyota has sold over 133,000 vehicles, placing it nearly 60,000 units ahead of its closest rival, Holden.
There is a reasonable prospect that after 2017 smaller importers may begin to erode Toyota's fleet sales base if buyers desert Toyota for companies that can supply a 'near enough' product at a lower price. Or better still, a superior product at a lower price.
Holden has already drawn a line in the sand, with boss Gerry Dorizas declaring the GM brand can regain number one.
Dorizas is certain that Toyota will lose roughly a third of its current market share after Altona closes, and Holden will correspondingly pick up 50 per cent more market share. He did not explain at the time why Toyota would be the only company among the three current manufacturers to endure such a rapid decline in market share after closing manufacturing facilities in Australia.
Precedent provides no hard-and-fast indications about Toyota's future in the market after 2017. When Nissan closed down its manufacturing plant at Clayton in 1992, the company lost massive market share almost overnight. But Nissan's Pintara, Skyline and Pulsar models were all being built here – and they were collectively the volume cornerstone of the company's sales & marketing strategy.
In contrast, Mitsubishi's sales dropped by just 4700 units in 2008, when the Tonsley Park facility closed and 380 production ended in March of that year. Sales had totalled over 65,000 in 2007, dropping back to just over 60,000 by the end of 2008, and falling again to just under 57,000 in 2009.
From 2010 sales had begun to recover, however, rising back to 62,496 that year, and then stabilising at 61,000 in 2011. In 2012 sales dropped off again, but last year had picked up and amounted to over 71,000 units.
What the Mitsubishi paradigm suggests is that a company less reliant on a locally-manufactured model will survive and even prosper after closing down its Aussie production facilities.
Based on that in isolation, Toyota will suffer a decline in sales, because Camry is far and away the largest selling model in the medium passenger car segment. But Holden has worse to fear, given its sales of the Commodore large car represent a much greater chunk of its Aussie sales.
There's also a school of thought that Toyota's private buyers would prefer to be buying an import rather than a car built in Australia anyway. Full-line importation may actually boost Toyota's local brand image.
It's different for Holden, however. Anecdotal evidence suggests Holden stands to lose a large proportion of private buyers who support the brand precisely because the car they're buying is built locally.
Lastly, Holden's plans do seem to be based on Toyota just rolling over and playing dead... which we don't expect to see in our lifetimes.
Current VFACTS top 10:
Toyota
Holden
Mazda
Hyundai
Ford
Nissan
Mitsubishi
Volkswagen
Subaru
Honda
What do you think the top 10 will look like in 2020?
Who will top the list?
Who will be the newcomers?
Who will drop out altogether?
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Written byKen Gratton
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