Toyota in U.S. and Europe: Reinforcing Lexus and high-performance lines
Recent sales and operating income in U.S. and Europe contribute to financial results
This report summarizes Toyota's business in the US and Europe mainly focusing on its model planning in those markets.
Japanese vehicles have been rated high because of their high quality and reliability. Toyota plans to explore still higher market image for the Toyota and Lexus brands by developing high-performance vehicles with emotional appeal to customers. For instance, Toyota will expand the high-performance Lexus F series and develop all-new Supra and Lexus LF-LC. These plans are one of Toyota's development and product planning pillars other than the adoption of TNGA and major renovation of internal combustion engines.
Toyota reported record-high operating income in the fiscal year ended in March 2014 (FY 2014) and in the April-June quarter in FY 2015. The high record was largely attributable to solid results in the U.S. and Europe. Toyota's sales in emerging markets in Asia and other parts of the world have been expanding in recent years but their growth is somewhat sluggish partly due to slow sales in Thailand.
High-performance the RC F to be launched
in U.S. in fall 2014 (photo courtesy of Toyota)
Driver's seat area of the RC F
(photo courtesy of Toyota)
Related Reports: Toyota: Implements strategy to launch fourteen new engines in two years (Sep. 2014)
Model plans for North America
Toyota will develop high-performance vehicles including the Lexus F and F SPORT. In addition, a sports car is under joint development with BMW. Toyota is operating under the slogan of "develop ever-better cars" and with the notion that its cars must provide the fun of driving at the same time.
Encouraged by the recovering profits, Toyota will accelerate its efforts to develop new technologies and "innovation" that will drive further growth. In this regard, Toyota has increased its research and development budgets from JPY 807.4 billion in FY 2013 to JPY 910.5 billion in FY 2014 and further to JPY 960 billion in FY 2015.
Model plans for North America by brand
|2014||Yaris redesign||RC coupe debut, NX debut|
|2015||Sequoia redesign, Tacoma redesign, Prius redesign, FCV debut||GS F debut, RX redesign||xB replacement debut, xD replacement debut|
|2016||4Runner redesign, Land Cruiser redesign||RC convertible debut, TX crossover debut), LX redesign||tC redesign|
|2017||Supra debut, Camry redesign, Prius V redesign||CT redesign, GX redesign, LF-LC debut, LS redesign, ES redesign||FR-S redesign, Crossover debut|
|2018||RAV4 redesign, Sienna redesign|
Source: Automotive News Jul. 28, 2014.
Toyota brand: Launching TNGA-based Prius and Camry, developing successor to Supra
|FT-1 Concept that is said to be successor to the Supra (unveiled at North American International Auto Show 2014, photo courtesy of Toyota)||Driver's seat area of the FT-1 Concept (photo courtesy of Toyota)|
Toyota will launch the all-new Prius in the U.S. at the end of 2015 as the first model under the TNGA scheme. Thereafter, TNGA will also be applied for the Camry, RAV4 and other model launches.
The all-new Yaris is likely to be based on the Mazda2 that is produced by Mazda in Mexico.
Toyota will develop a successor to the Supra, jointly with BMW, and will launch it in the second half of 2017. It is said that the FT-1 Concept exhibited at North American International Auto Show in January 2014 suggests the direction of the Supra's successor.
|Yaris||The all-new Yaris will be based on the Mazda2. Toyota will receive supply of the Mazda2 hatchback (known as the Demio in Japan) produced by Mazda in Mexico and powered by a 1.5-liter Skyactiv engine. Toyota will sell it as the all-new Yaris (designed by Toyota). Toyota will also receive supply of the Mazda2 sedan in 2015 and sell it as the successor to the Scion xD.|
|Prius||The U.S. launch was postponed from April to December 2015. The additional time was reportedly necessary as the Prius is the first model to which two major technologies (TNGA and new-generation hybrid system) are being applied. Production in the U.S. is not planned at present.|
|The Prius will be fitted with a gasoline engine with the maximum thermal efficiency increased from 38.5% of the engines used in the current Toyota's hybrid models to 40% or higher. It will be equipped with nickel metal hydride battery (entry class model) or lithium-ion battery (high-end model). The TNGA-based platform is expected to achieve up to 20% weight reduction. These innovations will lead to 8 to 10% improvement in fuel efficiency of the Prius. It is said that Toyota may use an electric double-layer capacitor for starting the engine on the hybrid model that stops frequently.|
|Production of the Prius plug-in-hybrid (PHV) will start in Japan in October 2016. The Prius v (sold as the Prius α in Japan) will be released for sale in the second half of 2017. An all-wheel drive (AWD) model, which is not available in the current Prius family, may be made available with the new Prius.|
|Successor to the Supra||Toyota is planning to introduce the successor to the Supra sports-car (fitted with an inline 6-cylinder 3000cc naturally-aspirated or 3000cc turbocharged engine) whose production was discontinued in 2002. Toyota is developing a sports-car jointly with BMW. Outcome of the joint efforts will be used for the Supra's successor that will be sold under the Toyota brand (refer to the section on the FT-1 Concept below).|
|Camry||The Camry will be redesigned based on the TNGA. A 2.5-liter 4-cylinder naturally-aspirated engine, 4-cylinder turbocharged engine and a hybrid system will be made available with the new Camry. The V6 engine will be abolished.|
|The Toyota FT-1 that was exhibited at the North American International Auto Show 2014 reportedly suggests the direction of the Supra's successor. "FT" stands for "Future Toyota" and "1" represents "Ultimate." It is a study concept for future sports-car design that appeals the powerfulness of a sports car while emphasizing the curved lines. The FT-1 is built upon Toyota's rich sport coupe experiences such as the 2000GT, Celica, Supra, MR2 and more recently Scion FR-S.|
|Specification details have not been disclosed but the FT-1 is a rear-wheel drive model powered by a front-mounted internal combustion engine. The cockpit is located far rearward within the wheelbase for better weight distribution as a sports car concept that is suitable for a racing circuit. Traditionally, Toyota's design decisions have been driven by consensus among several divisions. This approval process has been eliminated to design the FT-1 that will appeal directly to the customer's feelings.|
Lexus brand: Launching high-performance models in the LF-LC and F series
The Lexus brand has established reputation in the US for quality. Now, Toyota is set to provide performance on top of quality that will strengthen the brand's emotional appeal to the customer. Although BMW M, Mercedes-Benz AMG and Audi S/RS are not sold in large quantities, it is said that they are playing a leading role in improving the market image of their respective brands. As for the Lexus brand, the IS F is the only car in its high-performance line. Toyota plans to add the RC F in the second half of 2014 and the GS F in 2015 to the Lexus series. The Lexus F series offers high-performance cars that are suitable for circuits.
In addition, Toyota will launch the Lexus LF-LC in early 2017 with a price tag of around USD 120,000. It is said that the car will share many parts with the Supra's successor that is currently co-developed with BMW.
As far as the Lexus brand is concerned, Toyota plans to launch many models that will appeal more to young customers within a few years. The 2.0-liter turbocharged engine used in the NX will be made available on the Lexus IS, ES, GS and RC as well.
|RC350||The RC350 is a sport coupe built on the IS/GS platform unveiled at the 2013 Tokyo Motor Show. It was developed as an authentic coupe rather than as a two-door model derived from a sedan. The coupe, fitted with a 3.5-liter V6 engine and the same 8-speed direct-shift transmission used in the IS F, will be launched in the US in the fall of 2014. A convertible version will be launched in the spring of 2016. A version fitted with a 2.0-liter turbocharged engine will become available in the future.|
|RC350"F SPORT"||The RC F SPORT is fitted with the Adaptive Variable Suspension system that optimally controls suspensions according to the driving operations, and the Lexus Dynamic Handling system (consisting of Dynamic Rear Steering and Variable Gear Ratio Steering) that optimally controls the steering angles of four wheels according to the vehicle speed and steering maneuvers. The car is also fitted with special aluminum wheels, steering wheel, shift knob and some other parts that are developed exclusively for the RC F SPORT.|
|RC F||The RC F is a high-performance coupe suitable for circuit tracks. It made a world debut at the 2014 North American International Auto Show. It will be powered by a 5.0-liter V8 2UR-GSE engine with maximum output exceeding 330kW and maximum torque exceeding 520N･m. The engine is fitted with the D-4S direct-injection system. At cruising speeds, it uses the Atkinson cycle that enhances fuel economy and environmental performance. The RC F is said to compete with the BMW M4, Audi RS5 and Mercedes-Benz C63 AMG.|
|The letter "F" stands for "Fuji Speedway" and "Fun" of driving. The Lexus RC F is developed for maximum fun of driving on a circuit track and on a public road alike.|
(Note) Toyota estimates that the RC series will sell 15,000 units a year, of which nearly a half will be the RC F SPORT and 2,500 units will be the RC F.
Other Lexus models
|NX||The first compact crossover Lexus will be launched in the US in November (launched in Japan in July 2014). A 2.0-liter turbocharged version and a hybrid version will be available. Toyota expects that 90% of the NX sold will be the turbocharged version. It shares the platform with the RAV4 but has been improved in many ways. More high tensile-strength steel sheets are used on the NX. In addition, its suspensions deliver enhanced driving experience.|
|The annual sale goal of the NX is set at 36,000 units. It is a rather modest figure and will be much higher when the supply capacity is increased. The NX will fall between the BMW X1 and X3 in term of size. In 1998, Toyota introduced the Lexus RX300, the first luxury crossover model based on a passenger car, in North America. It turned out to be a smash hit that sold around 100,000 units a year. Toyota aspires to relive that experience.|
|GS F||The GS will also have the F grade fitted with a 5.0-liter V8 engine.|
|TX||Toyota plans to develop a 7-seater crossover model based on a passenger car. It will be built on an extended RX platform or on a larger platform. If it is sold under the Lexus brand, Toyota estimates that it will sell around 35,000 units a year. Toyota already has the Lexus GX460 (known as the Land Cruiser Prado in Japan) which is a 7-seater built on a truck platform.|
|LF-LC||Toyota plans to launch, in early 2017, a new model based on the LF-LC Concept that was exhibited at the 2012 North American International Auto Show and the 2012 Paris Motor Show. According to Toyota, the LF-LC is a design study model that displays future of the Lexus design. It will feature vibrant design in perfect match with the next-generation coupe.|
|The front-engine, rear-wheel drive hybrid 2+2 sports car will share many parts with the successor to the Toyota Supra that is currently co-developed with BMW. It will have a price tag of around USD 120,000 and will compete with Mercedes-Benz SL.|
Sales of the Scion-brand vehicles declined in 2013 and for the first eight months in 2014 due to a short supply of new models. Even the giant automaker has limited operating resources and Toyota is asking dealerships to be patient.
|xD||Toyota receives supply of the Mazda2 sedan produced by Mazda in Mexico and sells it as the Scion xD. The Mazda2 hatchback will be sold as the Toyota Yaris.|
|FR-S||The Scion FR-S (known as the Toyota 86 in Japan) was released for sale in 2012. The Subaru BRZ was launched in the same year as well. The next model of the FR-S is expected to be launched in 2017.|
A two-digit growth in Lexus sales in U.S. in 2013 and January-August 2014
Toyota sold 2.24 million vehicles in the U.S. in 2013 resulting in a market share of 14.4%, still lower than the 17.0% share recorded in 2009. However, Toyota prioritizes "making ever-better cars" and "sustainable growth" rather than hastening for a higher market share. Toyota has set the sales goal for the full-year 2014 at 2.3 million units (assuming that sales continue at 6.1% year-over-year growth after the first eight months, Toyota's annual sales will be approximately 2.37 million units in 2014).
Between sales results as at the end of the first eight months in 2013 and 2014, sales of the Toyota brand models increased by 5.6%, while those of the Lexus brand increased by 16.1% (the partially redesigned IS and GX were the major contributors to increased sales). According to the Automotive News on August 8, 2014, sales in the light vehicle market in the US during the first seven months of 2014 increased by approximately 5% whereas sales of the luxury brands such as the Lexus, Lincoln, Land Rover, Audi, Infiniti and BMW marked two-digit increases. The Automotive News attributes the high growth to introductions of low-priced luxury models, growing popularity of lease sales, and the promising U.S. economy in general.
Vehicle sales by brand and car/truck in the U.S.
|2009||2010||2011||2012||2013||Jan.-Aug. 2013||Jan.-Aug. 2014|
|Toyota div. car||938,468||850,601||785,765||1,035,733||1,073,070||761,345||772,450|
|Toyota div. truck||557,743||637,987||611,072||729,100||820,804||552,180||614,279|
|Total Toyota Division||1,496,211||1,488,588||1,396,837||1,764,833||1,893,874||1,313,525||1,386,729|
|Toyota Motor Sales||1,771,147||1,763,595||1,644,660||2,082,504||2,236,042||1,533,722||1,627,509|
|Total US Light vehicle||10,431,509||11,589,844||12,779,007||14,492,398||15,582,136||10,651,957||11,191,068|
Source: Automotive News Sep. 8, 2014
Launching Lexus NX and RC in Europe, improving production efficiency
|The all-new Aygo launched in summer 2014||The C-HR Concept being exhibited at Paris Motor Show in October 2014|
Toyota reported an operating loss of JPY 143.3 billion in FY 2009 after the global financial crisis. Since then, Toyota switched its operational strategy from seeking unit sales and market shares to seeking higher efficiency. Toyota turned to a surplus in FY 2011 and reported an operating income of JPY 58.2 billion in FY 2014.
As for model lineup for Europe, Toyota's Aygo, produced in Czech jointly with PSA, was fully redesigned in the summer of 2014 (the first-generation Aygo was introduced in 2005).
Toyota plans to launch new models in the Lexus NX and RC series in 2014 to 2015. Toyota estimates that the NX will account for one third of the Lexus models sold in Europe in 2015.
As for production, production of the Auris in the UK and Turkey was consolidated in the UK plant in 2013. Production of the Corolla, which had been exported to Europe from Japan and South Africa, was transferred to the plant in Turkey.
New models planned for launch in Europe
|Lexus NX||Toyota will launch the NX300h hybrid, the NX200h powered by a naturally-aspirated engine, and the NX200t powered by a turbocharged engine, in European markets. Toyota has announced that the NX200t will be released in February 2015 in major markets in Europe, and the NX200 in December 2014 in Russia. The NX series is expected to account for one third of the Lexus sales in Europe in 2015.|
|Lexus RC||The RC350, the RC300h hybrid, the RC350 F Sport, and the RC F, the highest-performance line in the Lexus series powered by a 5.0-liter engine, will be made available in Europe as well. The RC F will be released in major European markets toward the end of 2014, followed by the RC300h in 2015.|
|C-HR Concept||Toyota will exhibit the C-HR Concept, a design study model for a compact crossover, at the Paris Motor Show in October 2014. Toyota has announced that the C-HR will be displayed at the center of the Toyota booth. A hybrid version also will be available. The C-HR is positioned in class under the RAV4 and is said to rival Nissan's Juke. Toyota will reportedly begin producing C-HR-based crossovers for 100,000 units a year at the Turkey plant.|
|Other models||Toyota will also exhibit the CT 200h F SPORT and IS 300h F SPORT at the Paris Motor Show 2014.|
Restructuring production network for Europe
|Auris||The Auris was produced at Toyota's plants in the UK and Turkey until production was transferred entirely to the UK plant in 2013. As a result, the Auris production in the UK increased sharply from 48,821 units in 2012 to 142,751 units in 2013. The UK plant is also producing the Toyota Avensis (36,482 units produced in 2013).|
|Corolla||The Corolla that is sold in European markets used to be supplied from South Africa and Japan until production of the all-new Corolla started in Turkey in July 2013. The Turkish plant is also producing the Verso.|
|Production of the all-new Corolla started in South Africa in February 2014. Unlike the previous model that was exported to Europe, the new Corolla will be supplied to South Africa and other sub-Saharan countries. Toyota plans to reduce export of the Corolla from Japan to Europe.|
Results in April to June 2014 by region: Profit increasing in North America and Europe
Toyota reported a record-high quarterly consolidated operating income in FY 2015 first quarter (April to June, 2014).The sales data by region shows an increase in net revenues and operating income in North America and Europe. The quarterly operating income doubled from the previous year in both areas. Asian regions have been expanding sharply during the past few years, but the quarterly net revenues slightly declined in April-June 2014. The operating income in Asia increased only by 6.0%. As a result, North America became the top operating income earner, beating Asia.
Net revenues and operating income (by region)
|(in billions of JPY)|
|FY 2011||FY 2012||FY2013||FY 2014||Apr.-Jun. 2013||Apr.-Jun. 2014||YoY for Apr.-Jun.(Q1)|
|Source: Toyota's Financial Results|
|(Notes) 1.||The operating income for North America in FY 2014 reflects Toyota's payment of USD 1.2 billion penalty to the US Department of Justice for the delay in providing information for customers regarding the "unintended acceleration" while driving Toyota vehicles.|
|2.||The above results do not include Toyota's business in China where the equity method is applied.|
|3.||Daihatsu and Hino results are included.|
Full-year vehicle sales forecasts for FY 2015 revised upward for North America
According to the consolidated vehicle sales forecasts for FY 2015, announced in May 2014 simultaneously with the financial results for FY 2014, Toyota's global sales will reach 9.1 million units. This assumes sales growth in all areas other than Japan and Oceania.
However, the consolidated vehicle sales in April-June 2014 declined in Asia and Africa. The global vehicle sales remained unchanged at 9.1 million units in Toyota's forecasts announced in August. But the sales forecasts by region were revised upward for North America and Europe, and downward for Asia and other emerging markets. The downward revision was due to the weakening demand in Thailand, India and Brazil.
Toyota forecasts that the sluggish Thai market will start to pick up after FY 2016.
Consolidated vehicle sales
|(in thousands of units)|
|FY 2012||FY 2013||FY 2014||Forecast for FY2015||Apr.-Jun. 2013||Apr.-Jun. 2014||YoY for Apr.-Jun.(Q1)|
|Announced In May||Announced In August|
|North America Europe||1,872 798||2,469 799||2,529 844||2,620 850||2,710 860||689 193||710 207||103.0% 107.3%|
|Asia Latin America Oceania Africa Middle East Other||1,327 289 223 214 550 8||1,684 364 271 259 741 5||1,609 413 259 267 824 6||1,630 430 250 280 830 -||1,580 420 240 270 810 -||394 106 60 67 196 1||385 106 58 61 206 2||97.7% 100.0% 96.7% 91.0% 105.1% 200.0%|
|Source: Toyota's Financial Results|
|(Notes) 1.||The above results do not include Toyota's vehicle sales in China where the equity method is applied.|
|2.||Daihatsu and Hino vehicles are included.|
Production Forecast by LMC Automotive: Toyota Group Production will be 10.7 million units in 2017
|(LMC Automotive、August 2014)|
Based on the Global Automotive Production Forecast (August 2014), Toyota Group's light vehicles production is expected to be 10.7 million units in 2017, up by 7.7% from 2013.
At present, the majority of Toyota Group's production comes from Japan. However, the long-term domestic market is destined to contract, leaving little incentive to boost exports. LMC's forecast is for a gradual decrease in production which will eventually stabilize at around 3.6-3.7 mn units.
Production in the U.S., the second largest producer country, will be 1.6 million units in 2017, up by 22% from 2013. The Georgetown facility will expand in 2015 with additional capacity added to produce 150,000 more vehicles by 2017.
Production in China, the third largest producer country, will be 1.1 million units in 2017, up by 30.6% from 2013. LMC forecasts the negative impact of political issues in China to gradually ease, and for sales in China to start growing in 2014.
Thailand, Indonesia and India are also expected to gain ground in the longer term. In countries with large populations, such as China, Indonesia and India, production increase will be supported by domestic sales growth. Thailand, however, will gain greater significance as an export base. Production in these countries in 2017 will be 805,737 units in Thailand, 881,904 units in Indonesia and 304,764 units in India.
Toyota Group Light Vehicle Production Forecast by country
|Toyota Group total||7,677,671||9,678,559||9,990,770||10,148,798||10,168,086||10,593,622||10,726,808|
|South Africa sub-total||153,244||151,848||155,233||162,924||186,109||196,671||201,285|
|Czech Republic sub-total||90,667||73,086||69,383||70,755||106,290||100,692||100,721|
|Source: LMC Automotive "Global Automotive Production Forecast (August 2014)"|
|(Note) 1.||Data indicates figures of only small-size vehicles, including passenger cars and light commercial vehicles with gross vehicle weight of under 6 tons.|
|2.||All rights reserved. Reproduction of any data will require permission of LMC Automotive.|
|3.||For more information or inquiries of forecast data, please contact LMC Automotive.|
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