Automotive News [sub] reports that Toyota is set to re-start Tundra production in their $2b San Antonio plant– although consumer demand for the full-size pickup is only obvious by its absence. “At the end of July, Toyota had about 60,000 Tundras in inventory, of which 45,801 units were in dealer stock. At the end of October, dealer stock had fallen to 29,784, according to Toyota. But Tundra sales have fallen sharply. Initially, the company had hoped to sell about 20,000 a month. When the economy began to slow late last year, the forecast was revised to about 15,000. In recent months Toyota has fallen well short of hitting its goal. Combined September and October sales were 14,121 units, off 62.3 percent from last year.” Even $10k on the hood of a brand new Tundra ain’t movin’ the metal– although it is disappearing any hope of obscene profits. “I have no doubt that there is a pent-up demand,” said John Matthews, managing partner of Pat Lobb Toyota of McKinney, Texas. “If I don’t see another Tundra until January, I’ll be happy,” said Jeff Daniels, general manager of Toyota of Muncie in Indiana. Imagine how Chevy dealers feel. Anyway, as commentator JT rightly points out, ToMoCo is ramping-up production to ship these bad boys to the Middle East. Hey, given fixed costs, they might as well do something with them.
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It’s a smart idea. For Toyota, the cost of debt is cheap (Japanese interest rates are practically zero), the company is sitting on piles of cash, and the domestic truck makers are in deep trouble.
And gas is now below $2.50/gallon, so there is a good chance that we will see a partial recovery in the truck market, particularly for those few auto companies who are able to finance their customers.
This is a perfect time for them to take market share from the domestics, market share that they can keep permanently. The profits now will be minimal, but it will turn into bigger profits in years to come when they’ve gained conquests who haven’t been easy to reach.
I filled up yesterday at $1.83/gal. Next to me was the proud owner of a brand new optioned-out Explorer. Maybe Toyota is calling this market correctly.
Toyota has the muscle right now for growth and by damaging the competition by adding more new trucks onto the market. As a result the belittled 2.8 would be forced to take even bigger losses to move their trucks. Toyota needs as much growth as possible to make up for not being included in the bailout.
Aw, geez gang…try to keep up, please.
Several news stories from the end of October, this one from AFP. Your particular attention to the last paragraph.
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Toyota says it will reopen US plants to ship to Mideast
Oct 30, 2008
TOKYO (AFP) — Japan’s Toyota Motor Corp. said on Friday it would reopen three US factories after a three-month suspension due to falling US demand, using them to produce exports for the Middle East and Latin America.
The factories in Texas, Indiana and Alabama will resume producing Sequoia sports utility vehicles and Tundra pick-up trucks by mid-November, Japan’s largest automaker said.
Toyota halted operations at the three factories in August as car sales plummeted in the United States amid the global financial crisis.
But Toyota said it has decided to reopen the factories to produce 15,000 Sequoia SUVs a year for sale in the Middle East.
The factories will also make another 150 Sequoia SUVs along with 1,000 Tundra trucks to sell in Latin America, the company said.
With the decision, Toyota will no longer have any suspensions at its US factories, a Toyota spokeswoman said.
JT :
See? I KNEW there was a reason.
Text amended.
Not everyone can fit in a Honda Fit. With lower gas prices some buyers will bulk up and buy an unnecessary truck just in case they might “need” it.
RF:
Thanks, Boss! My thinking is that most of the Toy-trucks built here will go to Central and South America–a constantly overlooked (but rapidly growing) market. Kind of a no-brainer when you consider shipping costs, etc.
Some will go to the headline-grabbing Middle East (where is that, exactly?) but if there’s a solid demand over there, I would expect Toyota to spin up their Asian and Euro factories to meet it.
(edit/add)
And from the “fair and balanced” department, this just in from
“The Moscow Times on-line” (yeah, THAT Moscow…)
Medvedev Warms Up At GM Plant Opening
http://tinyurl.com/6428vx
Again, note last line: “Your Chevrolets and Opels will be selling like hot cakes.”
This is a very Toyota thing. They have the ability to move product from parts of the world where sales are low to other parts of the world where sales are higher. They are exceptionally good at this, and this is one of the reasons they make a buttload of money.
My favorite example is Scion. When Scion first started, they thought the normal looking xA would sell twice as well as the funky xB. In reality, the xB sold twice as well as the xA. Opps. Now, if GM or Ford was in this situation, they would have to put thousands of dollars on the hood of xAs to blow them out. But what does Toyota do? Replace all the Scion badges with Toyota ones, and launch a “Toyota xA” overnight in a half dozen Middle Eastern markets (the car was called the Toyota ist in Japan; there was no Toyota xA until the supply problem). Supply problem solved.
Quote: “JT :
November 10th, 2008 at 11:57 am
Aw, geez gang…try to keep up, please.”
Like JT says….try and keep up. According to one of my Sales Director friends ‘Inside the Tech Center fortress’ GMT900 SUVs are doing quite well with several shifts working overtime for the last few months to keep up with export demand.
Like the Sequoia sales, the Middle East, Russia, Eastern Europe, Central and South America cannot get GMT900 SUVs right now, partly because they have super-cheap gas AND petro-dollars to burn. With 90% of these sales being cash sales, all is well if your a GM dealer in Dubai, Jordan, Saudi etc.
According to my friend, in October 40%+ of all GMT900 SUV sales are headed for export and have been for the last couple of months.
Cruising in my ‘Slade rolling on Dubs in Dubai…