Jim Croce wouldn't like TTAC; we have no compunctions about tugging on Superman's cape. In fact, it's no big deal. But it is for Automotive News [sub]: "Still, Toyota's vaunted inventory controls have come up against market forces even it cannot tame." Whoa! And there I was thinking ToMoCo had moved past inventory control to weather control. Nope. "The number of units in dealership stock and en route have swelled to about 376,000. That's about 100,000 units more than were on the ground last summer, and up from about 348,000 a year ago." While ToMoCo's "turndown pool" (vehicles rejected by dealers) has swelled to 9700 vehicles, these stats are, frankly, small beer compared to the situation over at GM. GM's cash flow and profit-critical truck inventory may be in great shape, but that's because the American Axle strike means they ain't building them. And they've just announced their decision to make 138k fewer trucks this year. That's in addition (?) to all the trucks they're currently not making. "With rising fuel prices, a softening economy, and a downward trend on current and future market demand for full-size trucks, a significant adjustment was needed to align our production with market realities," said Troy Clarke, GM NA Prez. This, folks, is the reckoning.
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The world’s economy is slowing, the credit crunch is producing fewer customers, raw material prices are going up and Toyota has a rising inventory list. Big deal! Toyota’s production system was designed to change shape at the flick of a switch. They’ll just ramp down production a little or convert production to cars which are selling.
Compare this to GM’s problems of the strike, a union wanting a fair deal and bad inventories (once production starts again), I think Toyota are handling the “World’s number 1 auto maker” title well….
It will be interesting to see if Toyota starts increasing rebates to push the metal. With their cash situation they are certainly able to get extremely agressive with pricing should they decide it’s necessary.
KatieP:Going from full size trucks to cars at the flick of a switch?Not even in the most flexible of flex plants.Granted,Toyota is sitting on a lot more cash than GM.Cash that goes a long way when times get tough.Toyota still has to face cuttting production to meet demand.
You got to love that quote from Troy Clark GM.NA.”significant adjustment was needed”
we lost 1000 jobs at the Oshawa truck plant yesterday,plus the feeders and the ripple effect.
Us folks on the floor heard the news at 2:45 pm yesterday.At 3:00 Buzz anounces a deal at Ford?
I think I’ve had my share of signifcant adjustments for this week.
I think the market bottom in the last real recession (1991?) was about 13.6m units. There’s many more people/drivers these days, but I think that annual rate is within sight the next couple years. After all, who really NEEDS a new vehicle. Of course GM, Ford are predicting a rebound in ’09. The old “pent up demand” scenario. Good luck with that.
In any event, the mix is going to look more like 1991 than 2001 – ie many more cars than trucks.
I would expect Toyota to reduce imports from Japan to the US and then use that capacity to sell into the booming emerging markets. Other than the US market Camry, Toyota’s US market cars are made with the same tooling that makes cars for other markets as well.
Toyota can weather this storm with just a slight dip in profits. GM, on the other hand, is not so lucky. Ford is also stuck with a lot of US-only designs. Chrsyler doesn’t even have a meaningful presence in emerging markets.
jthorner has it right. Toyota has one advantage that GM doesn’t. Toyota has a global market for their cars. So they can shift inventory and shipments a lot more than GM can. Toyota Corollas and Camrys are popular everywhere.
The only question in my mind is: Are these Toyotas, build to US and California specs, sellable in other countries? Do they need modifications?
Well Brazil can absorb about 24000 of them Corollas, but that’s about it (if they don’t produce any down here). Camrys? Nope, not sold here in any significant quantities. Guess they’re stuck with their unsold inventory. The thing is their cars are ighty expensive for 3rd world folk.
“at the flick of a switch”???? Really. Are they magicians or something now??
@yankinwaoz:
Camrys and Corollas are not sold worldwide. Camry is a dirty name in the UK for example, as many recall cheap London minicabs with bumpers hanging half off.
Go to Toyota UK, and Camry and Corolla are not even sold. Some folks are not turned on by bland, about as good as Hyundai vehicles (or is it the other way round?)
I’d think Toyota would have to flog them in North America. They could sell them all in Canada tomorrow if they lowered the price to US levels, about $7K to $10K off depending om model. Hell, I might even become boring and bland myself at those prices and buy one.
That’s why Buzz and his CAW members need a high wage — to pay extortionate car prices in Canada.
To all people who think Toyota can get away by trying to sell these excess of cars abroad, should think again.
For instance, you can’t sell Camries or Corollas in the UK, not because of the name….but because we have our steering wheel on the correct side (i.e the right hand side).
Not to mention, that cars made for one market, might not necessarily be legal for sale in another (i.e doesn’t meet safety standards, engine has to be fixed to able to use the petrol in that market etc). GM wanted to bring the Vauxhall/Opel Agila to the US to be its flagship small car. Unfortunately, it couldn’t meet crash standards for the US and to modify it would price it out of the market.
All of this adds costs to getting rid of some inventory which Toyota could easily sell in North America with some discounts. By which time, they can re-work their plants to cope with the lower demand….simple, really.
I do think that given the absolutely unprecidented changes now happening in the world economy, that even Toyota is going to be dinged and dented.
IF (big IF) we have a global depression (D word, not R word “recession”) then if it is as bad as the last US Depression from 1929-1945, then you will see a 75% drop off in vehicle sales.
In which case, Toyota may be in trouble, for GM, Ford and Chrysler will be history.
Even surviving a depression (and even making a profit in a few years during a depression) is no guarantee of long-term survival.
Nash made a profit in 1933, the only automaker in the United States other than General Motors to do so. The brand did not survive 1957, having merged to become American Motors in 1954, and American Motors was absorbed by Chrysler in 1987.
Good luck to you, Mikey. Interesting times…
Camry was last sold about 5-6 years ago in the EU market, and from what I recall was a failure. It’s sold in many other parts of the world.
Toyota UK -> Toyota USA LHD equivalent
Agyo -> none
Yaris -> Yaris
Auris -> Corolla/Matrix (same platform)
Verso -> Corolla (prior gen platform, I think)
Prius -> Prius
Avensis -> Scion tC coupe (same platform)
none -> Camry/Solara
none -> Avalon
RAV4 -> RAV4 (but US has the version with longer body)
none -> Highlander
Urban Cruiser -> Scion xD on stilts
Land Cruiser -> Lexus GX470 (4 door)/4Runner/FJ
Land Cruiser V8 -> Land Cruiser/Lexus LX570
Hilux -> Tacoma pickup (same platform? dunno)
none -> Tundra/Sequoia
HiAce -> none, US instead has NA market only Camry-based Sienna
Dyna -> none
Starlightmica,
There’s no way the Camry was sold 5-6 years ago in the EU.
The Avensis has been around for 10 years and before that it was the Carina E.
Last Camry I saw on the roads was about the late 80’s.
@KatiePuckrik: I remember seeing a picture of the prior-gen Camry at an EU auto show – Geneva 2002, perhaps?
Edit: here’s an article about the Camry being discontinued in 2004
Starlightmica,
it must have been a concept or something because the Camry has not been sold (at least in the UK, but the line ups are similar around the EU) for ages.
The Camry has not been part of the official Toyota line up in the UK for at least 15 years, I’m sure of that.
Camrys and Corolla are quite popular in South Asia and Middle-east, on the other hand, Chevy Cobalts and Tahoes are pouplar in……?
I find this thread quite interesting. Here in Canada I had to wait a month to get my new RAV4.
Not following some of the logic here.
Toyota can re-tool their plants at the flick of a switch, but GM can’t?
There’s a strike going on at the GM plant where they (don’t want to) make trucks. Right now this is a best case scenario for them.
To say Toyota can sell Toyotas someplace else (ex – Australia), but GM can’t? They have Opel there, they have Vauxhall in Europe. They’re just not called “GMC” or “Chevrolet”. Even if they could, why would they ship domestic cars over there anyway? The tariffs and taxes would kill them, and they’d be competing with their own foreign models.
I have no brand loyalty, but all around my neigborhood I see Acadia’s replacing Siennas, and Accords and Camry’s giving way to Malibu’s.
The domestic automakers may be in some dire straights, but the thought that a worldwide economic downturn can be weathered by Toyota at the “flick of a switch”, while everyone else is doomed, is a little skewed, imo.
The prior gen Camry was sold in Europe, but was discontinued after the redesign. The Avensis (slightly smaller) is in that market segment in Europe. The Camry is popular in parts of Asia, as well as in Australia.
But Toyota overall has a much more flexible production system. If demand sags in one part of the world (for one model or overall), they can just ship future units originally intended for that market to other, hotter markets, making whatever minor changes to the vehicles needed for the new markets before they are built.
Here’s a good example of Toyota’s flexibility in this regard: When Toyota first started up Scion, they thought that the normal looking xA would sell twice as much as the funky, boxy xB. Of course, what actually happened was that the xB sold twice as much as the xA.
Opps.
Now, if GM had this problem, they would have to put massive discounts on the xAs to blow them out.
But Toyota is more flexible than that. Suddenly, a “Toyota xA” appeared in a half dozen Middle Eastern markets (note that prior to this there was no such thing as a “Toyota xA”-the Japanese market version of the xA is called the Toyota ist). Problem solved.
I don’t think it really matters. As the old joke goes, Toyota doesn’t have to outrun the bear. They just have to outrun GM, Ford and Chrysler. What are the chances that they won’t do that?
Recession or not, people and businesses still need cars and trucks.
I drive past a few Dealer storage lots on the way to work every day. One of them is a Chevy/BMW/Mini dealer. One of their lots was almost always full of trucks, to the point of having trucks lining the large hill at the back of the lot. Lately the lot has been much emptier, and I noticed yesterday that there were a few Minis parked in the almost empty “truck” lot, first time I have ever seen that. Perhaps they have started parking the trucks elsewhere, but you can’t see where from the road. I am wondering if dealers are starting to reduce buying new vehicles. I have noticed that Used cars are taking up more space on lots lately…
friedclams: Thankyou
rpenna :We thank your whole neighborhood.
Mikey
Overcapacity is overcapacity. The xA/xB example is a good one for manufacturing flexibility. But this isn’t an example of a zero-sum game. This is that sales flat out aren’t there.
Toyota has mountains of cash, and it is certainly in the best position to weather a storm. HOWEVER, Toyota does find itself in an overcapacity situation, and it is getting worse. TMMTX was built specifically for the Tundra, with its predicted large increase in sales. Sales are no better, perhaps slightly worse (despite giant incentives, far bigger than the old truck). TMMTX was a $1 billion+ investment. Add to it Sequoia sales are in the tank and TMMTX should never have been built. TMMI was, and would still be more than sufficient to meet demand.
Now, add to this they are building TMMC-Woodstock to build RAV4’s, and TMMMS to build Highlander. Ouch. Two new plants to build two vehicles. This sounds an awful lot like how Detroit used to do it (1 vehicle 1 plant). They may be able to shift RAV4 to TMMMS, lets say, but then what are they going to put in TMMC-Woodstock?
It is a serious issue for any automaker to have overcapacity. It was a possibility for Toyota even before this downturn. Now it is becoming a VERY serious problem. Again, the cash will help, but lets also not forget that GM used to have piles of cash too. Eventually mistakes like this will catch up to you. Toyota is not immune.
mod +1 (Insightful/Informative) Excellent post Jerome10
KatiePuckrik :
April 29th, 2008 at 11:15 am
Starlightmica,
There’s no way the Camry was sold 5-6 years ago in the EU.
The Avensis has been around for 10 years and before that it was the Carina E.
Last Camry I saw on the roads was about the late 80’s.
Katie…. You’re wrong about this one. I owned a 1992 model year Camry I the UK. I bought it used around 2000 and they were defnitely still selling the next generation Camry (97-2001?) at that time.
You’re certainly right that they were never really a success in the UK. I think they never found thier niche in the UK? They were marketed in a price band that put them up against the lower-end BMWs and such like – and I think that folks just didn’t see them as outwardly flashy looking.
It did make them an absolute bargain as a used car. They tended to by bought new by middle age, middle-income, middle-class folks who had them properly serviced and didn’t thrash them or run up huge mileages. So there were some very nice condition low-ish mileage one-owner trade-ins out there….
If you weren’t too concerned about “image” they were very confortable, very spacious compared to their peers, very well-built, utterly relaibel and a bargain.
One of those strange enigmas…. never really caught the UK car-buying public’s imagination yet people that actually owned them. invariably loved them to bits…
Mine was virtually faultless. bought it with 65,000 miles on it, put another 50,000 on it with nothing more than a blown light bulb to fix (aside from regular scheduled service work).
I stand corrected. I read Honestjohn.co.uk and apparently there was a 2006 model!
I really am at a loss at to how this one passed me by, especially since I’m a big fan of Toyotas!
My apologies, to all.
On a recent Tour of the Toyota plant in Cambridge, Ontario, we where told that most of the production of Corollas and Matrix model are shipped to Toyota in Clarence, California. this plant also makes the Lexus RX350, only plant outside of Japan that makes a Lexus Model, saw one in front area of the Plant, it was a good looking vehicle but out of my price range, to make the Leather Seats they use a local Mennonite Manufacturing plant in nearby Elmira, Ontario.
I really can’t see Camries/Corollas being the problem. We went to the local Toyota dealer the last two weekends to look at Prius colors in person (for our 2nd), and there were rows and rows of Tundras sitting unsold. (They are back up to about a month wait on a Prius unless you like buying one that is loaded up with dealer crap).
People who used to buy SUVs but won’t now are perfect future Camry customers – that, after all, is what people like that used to drive.