bitkahuna

iTrader: (20)

watching Toyota/Lexus these last few years have been somewhat baffling to many of us, but maybe there's a method to the apparent 'madness'

specifically, many of us have noticed how many models have been kept on incredible long cycles, with relatively minor updates to try to keep them relevant. one could say, heck they're still selling great so why tinker with success? good question, but not the most relevant i don't think.

obviously they HAVE been continuing some major investments and implementation with the TNGA platform on Corolla, Camry, RAV4 and possibly others, i don't track it too closely. they've made a pretty big effort too to make some models get sportier, or sleeker/lower. and the huge hybrid tech investments they started a couple of decades ago.

the recent supra announcement had many scratching their head, many in disbelief that toyota would use a BMW platform and engine for a new gen of it's ICONIC brand, Supra.

now there's word they may use a Mazda platform for other models.

partnerships by toyota (and many auto companies) are nothing new, working with subaru, yamaha, and others. but something seems to have shifted, combined with the agonizing long product cycles for some formerly EPIC models (Land Cruiser / LX to name one, and 4Runner, that are now sadly long in the tooth, but still producing great money for toyota).

so what is this all about? ok, my theory... i think toyota concluded many years ago that there's going to be some (several) giant upheavals in the car business. between electric cars, autonomous driving, ride sharing, and who knows what else, and that these upheavals and trends are going to be almost impossible to predict. there's also the possibility with teleworking, work 'centers' where people can take convenient public transit to work and back, and other trends, that demand for cars could drop like a rock (there's reports out there already predicting this as well). so if toyota concluded the future is challenging to prepare for at best, then it can prepare by having VAST hoards of cash on hand to sieze an opportunity, likely through several acquisitions. in the mean time, spend as little as possible on R&D through partnerships, relatively simple model upgrades, and ride the WELL DESERVED tremendous brand loyalty, reliability, and pristine reputation that toyota has.

my theory does perhaps have holes in it, like the current Lexus LS. i'm not sure what market research they did, but while it has many beautiful attributes, and must have cost a bundle to develop, i think it missed the mark. but by not producing a new V8, which saved money, even if that puts a bit of a dent in the reputation (and many loyal owners LOVE the wonderful Lexus V8 in prior models). or maybe Toyota/Lexus concluded "well we have to do something, so let's make it a sexy shape, which isn't as expensive to develop as radical new technologies" mind you, the 3.5TT must have been very expensive to develop, given the standards for reliability, refinement, and longevity. the hybrid on the other hand, maybe it was rushed, but it doesn't seem to be winning hearts and minds overall.

so i think toyota is biding its time, saving cash for future needs. doesn't mean it isn't doing other longer term research of course, like solid state battery development, and they have a self-driving unit.

what do you think?

Sulu

I am afraid, bit, that you may have opened Pandora's Box by starting this discussion. You may have given carte blanche to all the trolls who will now flame on about how ugly the Spindle grille is; or how the sheet metal is now paper thin; or how fit and finish is worse than Kia; or how the engines and technology are ancient; or how there have been no innovations for so, so, so many years; or how boring they are to drive...

mmarshall

I agree with much of what you say, except that I'm not convinced that electric cars and/or autonomous driving is going to be inevitable. The public has been sold a bill of goods on that....especially until we get an adequate infrastructure in place.

Bit's a very experienced moderator, and knows what he is doing.

bitkahuna

iTrader: (20)

well we will moderate out trolling behavior and that certainly wasn't my intent. i don't even think it's a bad strategy if i'm right!

it has nothing to do with the spindle grille. toyota sheet metal is by no means paper thin, but like all manufacturers they've been forced to make compromises in the name of fuel economy, but all new cars are way more rigid and safer than the past. fit and finish across all brands is higher than ever. yeah some engines / transmissions are old, and not that efficient by today's standards but the hybrids are still tremendous in efficiency. interiors are somewhat subjective and toyota/lexus certainly has a variety, some i like, some i don't care for but then i'm not a target for all the models of any brand.

anyway, hopefully it can stay civil in here, and if not, it will be closed, but this 'theory' of mine has been on my mind for a while... basically trying to answer what in the heck is toyota up to?

mmarshall

Probably the most obvious goal (besides long-term profits) is to remain the world's largest automaker. They have had to battle that position out with GM and VW in the past.

Toys4RJill

Maybe you just don’t “like” Toyota? There is nothing wrong with that. There are other brands out there. You seem to have it hard for the 4Runner, which clearly is not the right model for you, we have two in the family, a highly satisfying model from Toyota, but hey, you never owned one long term to be able to discuss with me?. LS500 is a nice car, probably the first Lexus since the LFA to make Jay Leno’s garage or Harry’s garage. The LS500 3.5tt performance is vastly superior to that of the 3.5?tt G90.

I don’t like some of the direction Toyota is going, but they still make some decent products.

Maybe my opening line was wrong. Maybe you really like Toyota and are just envious of something?

coolsaber

Toyota cannot predict the future, nor can anyone else. All you can do is make sure your diversified and ready to move at a markets notice. In terms of tech sharing agreements its nothing new, and I think we will see a lot more of this on the regular for Toyota and others in the market as the market starts to change what is valuable to the end user and how they differentiate what each segment is defined by. Your seeing that with how carmakers have gone from limiting in-car infotainment options and semi-autonomous features to top $ models, to where even the basic corolla comes standard with what a Mercedes S-class had offered an option just a couple of years ago.

Now to the "trolling" and "speculation" on Toyota's current state of affairs.
In terms of prolonged models like the say the LS, GX, LS etc etc, it seems as those models are delayed because either the rollout schedule was delayed by some reason or the other (final design issues or simply market dynamics). For instance, as evidenced by own posts I personally think the 2020 GX is an absolute joke of a refresh. However as much as I think, I`m not Lexus and the sales numbers for this vehicle are quite extraordinary. Attribute it to the trunk money or not, its still a work of genius for such an old design. Now from what I gather from the various rumor mills, this 2020 refresh was scheduled to be out much earlier and was stopped for one reason or the other.

In terms of the LS, it is what it is. One example that I dearly cling onto is that the community on this forum is a small vocal minority of the traditional lexus brand. Post after post can state that if Lexus did this differently with the LS, they`d buy it in a heartbeat or The LS is perfect as is. While those maybe true for the respective owners, the majority of the LS owners dont feel that way, and my theory is Lexus could have produced the dream LS of the CL community, and it`d probably have sold lacklusterly as well. Large sedans have a finite appeal in this current market.

In terms of why Lexus is trying partnerships instead of doing it on their own, besides the industry trend. I think Toyota/Lexus know the fatal flaws of the future of automobiles to a degree. Lets face the facts here, for the short term combustion engines will be and are downsizing and long terms it will go extinct or maybe a different much less version of itself then what is currently on the market. EV/Hybrids and autonomy is where the auto is going. Now in terms of hybrids and lean mfging, they have their stuff down better then anyone else. EVs, battery tech, autonomy, and end customer useability their behind. What separates them from being where they are now to the dominant powerhouse.... a WHOLE LOT OF RD and acquisitions aka a lot of $$$$$$$. Saving current development costs are whats going to fuel their journey. Thats it. They need as much working capital as they can; investing money into revising 12 year infotainment screens and interiors are not going to help them to that goal.

GaryJG

Toyota has figured out that low-volume models are not worth the investment in design, development, and manufacturing without teaming up with another manufacturer.
The economies of scale can be shown to enable the vehicles to be built profitably, but only when sharing development costs. Selling two versions under two brand names doesn’t hurt when the second brand is one as respected as Toyota.

bitkahuna

iTrader: (20)

as i’ve posted several times, i’m not a brand ‘like’ person so it’s not a question of that, and even if it was for me that’s not what this thread is about... just a theory on the strategy of a highly successful company that seems like it’s changed direction in the past decade or so. Toyota in the ‘80s was one hit and innovation after another with Lexus blowing the doors off the luxury market in the second half and ‘90s. I’d say the only innovation since (a big one) is the hybrids, the rest is evolution or catch up.

The 4Runner is right for you and clearly many other people too. But that doesn’t change the fact that it’s sold in 2019 with a 5 speed auto, poor fuel economy, an antiquated interior, etc.

haha, thanks for the cheap shot. The Lexus engine is of course bigger capacity (3.5 vs 3.3) and has 50 more HP. I’ve no doubt it’s an awesome engine.

we agree!!

envious? not a big envy person and certainly not envious of any car company or any company at all. As i’ve stated many times, i have immense respect for what toyota has done and continues to do. They’re a very disciplined company that makes extremely high quality things.

Fizzboy7

Interesting read, but it's anyone's guess what Toyota is really thinking. They make strange decisions, as do just about all other brands, if you really look at all models offered.

But if one wants to test the "saving their cash" theory, isn't there a way to see how much the company is currently worth?

oldcajun

Not according to any believable tests that I have seen. Although Lexus claims a sub-5 second 0-60 time, most tests are near 5.5 seconds which is pretty close to the 3.3 liter G90. The cars are close in performance, but the G90 excels in interior room and ride comfort and with similar equipment it is nearly $20,000 cheaper. The LS400 was a hit not only because it was so good, but because it was such a sterling value compared to Mercedes. Now it is time for the Genesis.

corradoMR2

Good read and I'm pretty much aligned.

The fact the fact Toyota is being very conservative in the BEV market, for example, supports your theory. Problem for Toyota is the BEV market is exploding for which car manufacturers will capitalize $ on over the next few years including being first-to-market which has additional value down the road. Toyota took big risks 20-30 years ago (hybrid tech + Lexus brand to name a few) and surely it paid off, but the complacency they are in recently is not comforting and a big risk IMO. Even the expansion of hydrogen-fuel-cell seems to have taken a pause (i.e. where's the LS FC and FC infrastructure), though I think that's a missed opportunity that Toyota needed to go "all-in" 5 years ago to now be competitive against BEVs and its ever-expanding supporting infrastructure.

Toys4RJill

I think you have a incorrect memory. Toyota did not dominate the 80s with one hit and innovation after another, Toyota just had cars that did not break unlike the US manufactures. Toyota in 1980s did not have very competitive products. The first 4Runner was what? a 3 door pick up with a shell on the back. Their sedans lacked any sort of performance among other things. It was also a time where sales from Toyota were not really increasing. Toyota's market share in the 1980s was stuck at around 6% for the entire decade. GM in contrast had 40% of the US domestic market, Ford was t 25%, you can clearly see who's cars were favored.

Then in the 1990s, NAFTA came around, everyone's way of life exploded and most car companies were on the rise. Toyota started to really grow in the mid 1990s. 1995 gave Toyota the start of 15 straight years of growth. Toyota now has the ability to design and engineer a car in the United States. More plants get built in the US, Tundra plant in Indiana, then Texas, then Mississipi. More engines are now build in the US

Today, Toyota is a full line manufacturer. Very hard to grow sales when you are already selling 2 million US plus per year. Add in a US car industry that is experiencing declining sales (and will never go back up). Crazy political turmoil in the US with threats of tariffs etc etc. Big transitions potentially coming in the US with electric cars.


Who cares? It is selling well. People seem to like. Has the highest resale value. Made in Japan. In Tahara. 1 in 5 get a road test for quality at the factory....... Its a Toy for those love the Toyota brand



Was not a cheap shot. Just wanted to point out while you rag on the LS500 engine, what car the G90 or the LS has the newer engine? What car has the worlds first 10-speed transmission? I do agree the LS500h should be a better set up.

What about their new engines and the high efficiency designs? Safety items standard across almost the entire line up of models? Bringing more production to US or Canadian manufacturing plants? NX in Ontario, ES in Kentucky. Building the Texas plant etc. A brand new Mississippi plant? What about their Mirai hydrogen model?

Toyota patent activity

damienqc

I am actually glad Toyota does not fall 100% for EV and autonomous cars.

It is not certain EV is ready for mass market in the next 5/8 years... It is still relatively slow to charge the batteries, the range is not great for long trips. Also you will need more plants to power a fleet of millions of vehicles (nuclear? coal plants would defeat the purpose of low emission cars).
Also there can be other factors at play in the future: more efficient/small gas engines, hybrids, public transportation for dense areas and new work policies (from home etc). The progress in these areas might delay the need for large fleets of EVs

For autonomous cars, I like Toyota approach to give more sensors to assist the driver rather than seeking for taking over completely. Problem with autonomous cars is how to deal with unpredictable situations where the driver needs to take over (unreadable roads, erratic drivers around).
Plane pilots spend a good amount of time training for such situation (assessing situation and acting quickly), amateur car drivers won't really be ready for that... After few crashes, Tesla already have to deal with lawsuits. Full autonomy will bring technical, ethical and legal challenges.

Same for the Supra, Toyota does not want to develop a new engine just for one car.

Their TNGA platform is the way to go. Toyota is a global brand that serves all continents, from rich to developing countries with a good reputation everywhere. They need to accommodate all.
TNGA will allow them to optimize development and sell different cars from the same base everywhere with good margins.

bitkahuna

iTrader: (20)

well 'worth' would be market cap which doesn't necessarily help toyota as their stock is publicly traded unless they want to issue more stock, but cash on hand is interesting and it's been increasing in recent years which supports my theory.

Toyota Annual Cash on Hand
(Millions of US $)

2018$51,497
2017$54,864
2016$45,508
2015$47,465
2014$42,683
2013$34,776
2012$35,778
2011$42,214
2010$43,547
2009$30,386
2008$23,012
2007$20,013
2006$19,193
2005$19,466


source: https://www.macrotrends.net/stocks/c...a/cash-on-hand