Toyota Targeting Texus, hoping to round up truck sales
03-27-06, 06:02 PM
#1
Super Moderator
Thread Starter
Toyota Targeting Texus, hoping to round up truck sales
Thinking small
Toyota heads to rural Texas, hoping to round up truck sales
12:00 AM CST on Saturday, March 11, 2006
By TERRY BOX / The Dallas Morning News
Small-town Texas, with its dusty cowboy and pickup truck culture, beckons Toyota Motor Co.
The Japanese juggernaut, best-known for its refined urban sedans and hybrid vehicles, is opening two small dealerships in East and Central Texas this year, as well as a larger dealership in Athens, east of Dallas – all of them unlikely locations for Toyota.
Toyota may need them, despite the fact that the hard-charging automaker is within 20,000 sales of catching up to the Chrysler Group (327,565 vs. 345,832 through February).
"We are a very mature company," said Mike Bevan, corporate manager of market representation for Toyota Motor Sales USA Inc. "Certainly, we want the big points in metropolitan areas, but we also are looking for other opportunities in perimeter markets."
Much of the company's growth in the last decade has come from new vehicles such as the RAV4, Highlander, Matrix, Tundra and Sequoia. Moreover, Toyota is conservative about adding dealerships in traditional markets, which further limits potential sales growth.
Now that the company has a full line of vehicles, some analysts predict that its growth will slow to about half what it was in the first half of this decade.
Toyota's small-town plan is "a smart move on their part," said Mike Dawson, manager of global forecasting analysis at J.D. Power and Associates. "As you get out in the next few years, it's hard to see them growing in double-digit numbers. It will level off toward the end of the decade."
Between 2000 and 2005, Toyota Motor Co.'s total sales – including the Lexus and Scion divisions – grew 27.2 percent, or 5.4 percent a year, according to statistics compiled by Automotive News. Last year alone, they increased nearly 10 percent. But J.D. Power predicts that Toyota's sales will grow about 14 percent between now and 2010, Mr. Dawson said, or 2.8 percent a year.
Toyota believes that it can do better than that, sustaining its current growth by constantly improving its vehicles. And Texas dealers expect the new full-size Tundra pickup to pump their growth even higher than overall national sales, which company officials predict will increase 5 percent to 10 percent this year.
Whatever the growth rate, some analysts say, Toyota will have to work harder for it.
"They are losing places where they can pull buyers from," said Wes Brown, an analyst with industry consultant Iceology in Los Angeles. "Right now, their momentum is strong enough to keep them at 5 to 8 percent [annual growth] for the next couple of years. After that, I think it will be in the 1 to 2 percent range."
Unlike the domestics, Toyota limits its number of franchised dealerships. Since the mid-1980s, Toyota has averaged two new dealerships a year in the U.S., Mr. Bevan said.
The company has 1,215 dealerships. The Chrysler Group, in contrast, has about 8,600, Ford Motor Co. has about 7,200 and General Motors Corp. about 15,400.
"Our strategy is fewer dealers with larger volumes and hopefully more profit," Mr. Bevan said.
Reading the ROMs
A third of Toyota's U.S. dealers have expanded or improved their growth-strained facilities. In the meantime, the company is also pursuing its small-town opportunities.
Inside Toyota, the new Texas dealerships in Mount Pleasant and Madisonville are called ROMs – "rural opportunity markets." At 18,000 to 20,000 square feet, the facilities will be half to two-thirds as big as a typical city dealership.
The Athens dealership is a conventional new store. A dealer has not yet been named.
Toyota dealers in nearby larger markets will own the two ROM facilities, said J.C. Fassino, vice president for marketing and market representation at Gulf States Toyota Inc., Toyota's distributor in this area.
Car dealerships are low-profit enterprises – typically netting about 2 percent in a good year – so Toyota hopes the dealers will earn a decent return from the smaller stores. The paired city and town dealerships will share some administrative and advertising expenses and will be overseen by one general manager.
The smaller stores will be complete operations, with sales, service, parts and finance departments, and will probably sell fewer than 1,000 new vehicles a year, Mr. Fassino said.
Toyota plans to open three more ROM dealerships, with one possible in the North Texas area.
"This is kind of a new franchise for us," Mr. Fassino said. "We intend to test the concept. We'll assess the ROMs we've got before we decide to proceed."
Truck sales
Sales may not be Toyota's only motivation, some say. The company's new and much larger Tundra pickup arrives at dealerships early next year, and Toyota wants to compete with the Big Three for buyers in one of the domestics' traditional strongholds – rural areas.
Toyota is completing an $850 million truck plant in San Antonio that will allow the company to more than double its current Tundra sales.
"We think that some of these rural points will sell more trucks than cars," Mr. Fassino said. "When you're going to be selling a new truck, obviously the rural markets become more important. We need to reach those customers."
'Trying to catch up'
Texas will account for about 70 percent of Tundra sales in Gulf States' five-state region, which includes New Mexico, Oklahoma, Arkansas and Louisiana. Mr. Fassino predicts that the rural dealerships could ultimately push up Toyota's sales in Texas by 10 percent to 15 percent.
"We are trying to catch up," he said. "Ford and Chevy have a real advantage, though I don't know that our game plan is to try to equal them in dealers."
Initially, the smaller dealerships won't be as lucrative as a major-market Toyota dealership, said Paul Taylor, chief economist at the National Automobile Dealers Association. But as sales grow, the small dealerships with their relatively low overheads may become more profitable per square foot than the big dealerships, Mr. Taylor said.
However, money and sales may only be part of the small-town picture.
"I think they would like to say that Toyota trucks have been accepted in rural Texas, which would have a lot of image value," Mr. Taylor said.
source : wfaa.com
Toyota heads to rural Texas, hoping to round up truck sales
12:00 AM CST on Saturday, March 11, 2006
By TERRY BOX / The Dallas Morning News
Small-town Texas, with its dusty cowboy and pickup truck culture, beckons Toyota Motor Co.
The Japanese juggernaut, best-known for its refined urban sedans and hybrid vehicles, is opening two small dealerships in East and Central Texas this year, as well as a larger dealership in Athens, east of Dallas – all of them unlikely locations for Toyota.
Toyota may need them, despite the fact that the hard-charging automaker is within 20,000 sales of catching up to the Chrysler Group (327,565 vs. 345,832 through February).
"We are a very mature company," said Mike Bevan, corporate manager of market representation for Toyota Motor Sales USA Inc. "Certainly, we want the big points in metropolitan areas, but we also are looking for other opportunities in perimeter markets."
Much of the company's growth in the last decade has come from new vehicles such as the RAV4, Highlander, Matrix, Tundra and Sequoia. Moreover, Toyota is conservative about adding dealerships in traditional markets, which further limits potential sales growth.
Now that the company has a full line of vehicles, some analysts predict that its growth will slow to about half what it was in the first half of this decade.
Toyota's small-town plan is "a smart move on their part," said Mike Dawson, manager of global forecasting analysis at J.D. Power and Associates. "As you get out in the next few years, it's hard to see them growing in double-digit numbers. It will level off toward the end of the decade."
Between 2000 and 2005, Toyota Motor Co.'s total sales – including the Lexus and Scion divisions – grew 27.2 percent, or 5.4 percent a year, according to statistics compiled by Automotive News. Last year alone, they increased nearly 10 percent. But J.D. Power predicts that Toyota's sales will grow about 14 percent between now and 2010, Mr. Dawson said, or 2.8 percent a year.
Toyota believes that it can do better than that, sustaining its current growth by constantly improving its vehicles. And Texas dealers expect the new full-size Tundra pickup to pump their growth even higher than overall national sales, which company officials predict will increase 5 percent to 10 percent this year.
Whatever the growth rate, some analysts say, Toyota will have to work harder for it.
"They are losing places where they can pull buyers from," said Wes Brown, an analyst with industry consultant Iceology in Los Angeles. "Right now, their momentum is strong enough to keep them at 5 to 8 percent [annual growth] for the next couple of years. After that, I think it will be in the 1 to 2 percent range."
Unlike the domestics, Toyota limits its number of franchised dealerships. Since the mid-1980s, Toyota has averaged two new dealerships a year in the U.S., Mr. Bevan said.
The company has 1,215 dealerships. The Chrysler Group, in contrast, has about 8,600, Ford Motor Co. has about 7,200 and General Motors Corp. about 15,400.
"Our strategy is fewer dealers with larger volumes and hopefully more profit," Mr. Bevan said.
Reading the ROMs
A third of Toyota's U.S. dealers have expanded or improved their growth-strained facilities. In the meantime, the company is also pursuing its small-town opportunities.
Inside Toyota, the new Texas dealerships in Mount Pleasant and Madisonville are called ROMs – "rural opportunity markets." At 18,000 to 20,000 square feet, the facilities will be half to two-thirds as big as a typical city dealership.
The Athens dealership is a conventional new store. A dealer has not yet been named.
Toyota dealers in nearby larger markets will own the two ROM facilities, said J.C. Fassino, vice president for marketing and market representation at Gulf States Toyota Inc., Toyota's distributor in this area.
Car dealerships are low-profit enterprises – typically netting about 2 percent in a good year – so Toyota hopes the dealers will earn a decent return from the smaller stores. The paired city and town dealerships will share some administrative and advertising expenses and will be overseen by one general manager.
The smaller stores will be complete operations, with sales, service, parts and finance departments, and will probably sell fewer than 1,000 new vehicles a year, Mr. Fassino said.
Toyota plans to open three more ROM dealerships, with one possible in the North Texas area.
"This is kind of a new franchise for us," Mr. Fassino said. "We intend to test the concept. We'll assess the ROMs we've got before we decide to proceed."
Truck sales
Sales may not be Toyota's only motivation, some say. The company's new and much larger Tundra pickup arrives at dealerships early next year, and Toyota wants to compete with the Big Three for buyers in one of the domestics' traditional strongholds – rural areas.
Toyota is completing an $850 million truck plant in San Antonio that will allow the company to more than double its current Tundra sales.
"We think that some of these rural points will sell more trucks than cars," Mr. Fassino said. "When you're going to be selling a new truck, obviously the rural markets become more important. We need to reach those customers."
'Trying to catch up'
Texas will account for about 70 percent of Tundra sales in Gulf States' five-state region, which includes New Mexico, Oklahoma, Arkansas and Louisiana. Mr. Fassino predicts that the rural dealerships could ultimately push up Toyota's sales in Texas by 10 percent to 15 percent.
"We are trying to catch up," he said. "Ford and Chevy have a real advantage, though I don't know that our game plan is to try to equal them in dealers."
Initially, the smaller dealerships won't be as lucrative as a major-market Toyota dealership, said Paul Taylor, chief economist at the National Automobile Dealers Association. But as sales grow, the small dealerships with their relatively low overheads may become more profitable per square foot than the big dealerships, Mr. Taylor said.
However, money and sales may only be part of the small-town picture.
"I think they would like to say that Toyota trucks have been accepted in rural Texas, which would have a lot of image value," Mr. Taylor said.
source : wfaa.com
03-27-06, 06:28 PM
#2
Sales may not be Toyota's only motivation, some say. The company's new and much larger Tundra pickup arrives at dealerships early next year, and Toyota wants to compete with the Big Three for buyers in one of the domestics' traditional strongholds – rural areas.
"We think that some of these rural points will sell more trucks than cars," Mr. Fassino said. "When you're going to be selling a new truck, obviously the rural markets become more important. We need to reach those customers."
"We think that some of these rural points will sell more trucks than cars," Mr. Fassino said. "When you're going to be selling a new truck, obviously the rural markets become more important. We need to reach those customers."
I think Toyota is doing the right thing with the Tundra. Get their attention without overshadowing the Big Three.
03-27-06, 08:14 PM
#3
i dont think it is so much patriotism as it is heritage. Alot of small town rural families around here are either chevy folks, or ford folks. So if the old man has an f250, then the kids usually get an f series, or vica versa. In the city toyota trucks may well real well, but out where a truck is really used as a truck, toyota is no good. the 07 tundra is said to have a 10,000lbs towing capacity, while the big three are all 16,000+lbs of towing capacity ( all 3 series trucks). toyota needs is great and all, but they just cant take over the whole market.
03-28-06, 08:28 AM
#5
Out of Warranty
The half-ton pickup is the most popular vehicle in Texas. Sales (and theft) of F-150's are always chart toppers, followed closely by Chevy/GMC C-10's. Dodge, with it's recent "Big Rig" styling and more worker-friendly interiors have also enjoyed a big upsurge insales. Crew Cabs and Extended Cabs have made the work truck more family-friendly, while touches of luxury, even on the more inexpensive models have lots of housewives driving the family truck - and finding the cargo capacity, safety and visibility much to their liking. It's the "poor man's SUV".
It's not just the cowboy mistique that sells pickups in Texas, but some of the macho image that prompts well-heeled urban commuters to drive a dually diesel seems to rub off on the average buyer as well. Even the lowest priced full sized pickups - with a judicious pencil on the order form can have nice rims, a decent sound system, and a reasonable interior for less than the cost of an ordinary family sedan. Parking is not much of a problem in the Lone Star State, and our roads are for the most part, quite good, meaning that the pickup will probably outlast a sedan especially if it is driven even only seldom off pavement. Add in the practicality of a pickup for hauling and family activities - and the fact that a pickup's styling seems to be set into a much longer cycle than a passenger car, meaning it will not only last longer, but LOOK newer longer - gives buyers good reason to consider a pickup.
Some of this will mitigate against a potential buyer considering a "furrin" pickup, having had very bad experiences with Toyota and Nissan pickups over the years - before they built a full-size pickups. The Japanese automakers are determined to crack this large market segment - but I look for their market penetration in Texas to lag national sales. "Japanese" and "truck" simply don't "figger" out on the range. We still prefer the American Saddlebred.
And besides, as the great philosopher Joe Diffie said: "You know there's something women like about a Pickup Man."
It's not just the cowboy mistique that sells pickups in Texas, but some of the macho image that prompts well-heeled urban commuters to drive a dually diesel seems to rub off on the average buyer as well. Even the lowest priced full sized pickups - with a judicious pencil on the order form can have nice rims, a decent sound system, and a reasonable interior for less than the cost of an ordinary family sedan. Parking is not much of a problem in the Lone Star State, and our roads are for the most part, quite good, meaning that the pickup will probably outlast a sedan especially if it is driven even only seldom off pavement. Add in the practicality of a pickup for hauling and family activities - and the fact that a pickup's styling seems to be set into a much longer cycle than a passenger car, meaning it will not only last longer, but LOOK newer longer - gives buyers good reason to consider a pickup.
Some of this will mitigate against a potential buyer considering a "furrin" pickup, having had very bad experiences with Toyota and Nissan pickups over the years - before they built a full-size pickups. The Japanese automakers are determined to crack this large market segment - but I look for their market penetration in Texas to lag national sales. "Japanese" and "truck" simply don't "figger" out on the range. We still prefer the American Saddlebred.
And besides, as the great philosopher Joe Diffie said: "You know there's something women like about a Pickup Man."
Last edited by Lil4X; 03-28-06 at 08:33 AM.
03-28-06, 08:40 AM
#6
comparing pickup truck safety to a sedan safety cant be done easily, both vehicles are held to much different standards for crash test ratings, one can argue its easier to flip a truck than a car, one can argue the visibility is worse since you deal with the bulk size of the vehicle and its enlarged blind spots. Who says japanese cant make a truck, you remember when the world said japanese cant make a luxury segment and look what happened. If the Tundra is successful, thats another nail in the coffin of domestics. Yea a domestic maybe able to tow more but 90% of owners dont tow anything anyways, irrelevant
03-28-06, 08:50 AM
#7
Moderator
Originally Posted by 4TehNguyen
comparing pickup truck safety to a sedan safety cant be done easily, both vehicles are held to much different standards for crash test ratings, one can argue its easier to flip a truck than a car, one can argue the visibility is worse since you deal with the bulk size of the vehicle and its enlarged blind spots. Who says japanese cant make a truck, you remember when the world said japanese cant make a luxury segment and look what happened. If the Tundra is successful, thats another nail in the coffin of domestics. Yea a domestic maybe able to tow more but 90% of owners dont tow anything anyways, irrelevant
Trending Topics
03-28-06, 10:31 AM
#8
Super Moderator
In Mexico, one thing that is not going to help Toyota truck sales is that they lack a small sized pickup. As many of you know, Mexicans routinely go north under a special amnesty law that allows them to get certain 90s models and earlier pickups at the U.S. border, nationalize them and drive them home. However, at home, I can see it as trying to convince many they are getting a better quality truck.
03-28-06, 07:40 PM
#9
I can't stand close mindedness when it comes to cars. You call yourself an enthusiast you should give props where props are due.
I like some domestics. I don't drive out all the domestics just because I don't drive one. Don't people realize that the domestics are having major issues lately? They hardly can sell based upon realiability and styling. They have to rely on these people that willingly fork over their hard earned money for some crap box that will need servicing 9 miles away from the dealership. Don't get me wrong I don't hate the domestics but they really need to step up otherwise they're gonna fold under.
The market without competition is not a market at all, I won't buy in.
I like some domestics. I don't drive out all the domestics just because I don't drive one. Don't people realize that the domestics are having major issues lately? They hardly can sell based upon realiability and styling. They have to rely on these people that willingly fork over their hard earned money for some crap box that will need servicing 9 miles away from the dealership. Don't get me wrong I don't hate the domestics but they really need to step up otherwise they're gonna fold under.
The market without competition is not a market at all, I won't buy in.
Thread
Thread Starter
Forum
Replies
Last Post