Is Toyota starting to go off? The giant Japanese car brand is still the best-selling in the country, but 2023 is not looking like a great year for Toyota. It has tumbled from controlling 21.7% of our market in 2022 to 17.2% in 2023.
As the next chart shows, almost all Toyota models have sold fewer units this year than in the previous year, with the chief exception being the Corolla Cross, which hadn’t been introduced this time last year.
The Corolla Cross, by the way, looks like smart marketing. Rescue one of your most iconic brand names from a dying class of vehicles (small hatchbacks) and stick it on a booming class of vehicles (small/medium SUVs). The car itself looks unremarkable, but that’s exactly what the Corolla brand promises. It’s plain and mainstream, like a pair of pants from Uniqlo (another Japanese brand selling mid-market items we can’t seem to get enough of!).
But other than that, Toyota lacks winners. The fall in Toyota’s market share is 4.6 percentage points — far bigger than that of the second-biggest loser, Mitsubishi, which lost 2.4%.
Toyota is hurting in a few segments. It sells HiLuxes, but the commercial ute market is not booming anymore. It sells passenger sedans, and that market is shrinking too. It sells hybrids, which have stopped growing in popularity. What it doesn’t sell is electric vehicles (EVs) and they are doing very well indeed. Tesla, BYD and MG are all growing their market share strongly.
Toyota’s kaizen system
Henry Ford may have invented the production line but Toyota made it sing.
Its kaizen system revolutionised factories. Instead of just standardising practices in the factory, they empowered staff to improve them. Kaizen means “change to make better”. The workers in Toyota factories aren’t mere drones, they’re responsible for the system’s success. The rest of the manufacturing world has slavishly copied the production systems Toyota invented. The results speak for themselves.
There’s a reason you’ll find Toyotas all over the world — from the Sahara to the Arctic Circle, the Pacific to the Himalayas. Warlords drive them, as do UN Peacekeepers. They’re reliable. We all love them: uni students in Yarises, pastoralists in LandCruisers, hipsters in Priuses and hoons in HiLuxes.
It’s a real shame Toyota didn’t embrace EVs because that category could use their careful attention. Teslas are renowned for their slipshod quality (which is what you’d expect from a Silicon Valley startup, really). The Elon Musk-backed company has made some great innovations, but dialling in precision at the same time is a big ask. If Toyota was big in EVs we would have a quality benchmark. Instead, we have a new era of Chinese-made EVs on the market. They seem genuinely great — I test-drove a BYD and loved it — but it doesn’t have the decades of performance that permit me to believe it will still run like a dream in ten years.
Fading in a booming market
Overall, Australians are buying more vehicles than ever. Sales this September were the highest ever seen in that month. Why? Well, over the pandemic, supply slowed down, so people held on to their old cars. Many people were already delaying buying a new vehicle so they could make sure their next car was battery-powered. Now that battery-powered cars are on the market in real numbers, those car buyers are finally buying, with the flow of petrol vehicles still ample enough to satisfy other buyers too. We’re no longer snapping up used cars in desperation. Used car values have been falling for nearly two years now.
The fade-out of Toyota, along with Mitsubishi, is not about currency movements.
The Japanese yen is weak against the Aussie dollar right now, so Japanese cars should be cheap. It’s not like the US dollar. We’re tumbling against that currency, which should mean US-made cars get more expensive (and will hopefully put to the sword the recent silly trend to buy enormous trucks made by RAM and Chevrolet). To win back our hearts Toyota needs to rush its battery electric vehicles to market. It claims to have an amazing solid-state battery in development, which could be ready by 2027-2028. But instead of waiting for that technology to come to fruition, it wouldn’t hurt to sell an e-Corolla with a standard lithium battery in it. Australians would flock to it.
It’s not like Toyota didn’t know the shift to EVs was coming. Instead, like many entrenched legacy manufacturers in many technologies, they’ve resisted change tooth and nail, or backed losing tech like hydrogen. Toyota is also, I believe, one of the most heavily indebted companies in the world, so financing the massive retooling needed to build electric rather than ICE vehicles was always going to be extremely difficult.
The reality is that EVs are inherently cheaper to build and operate than ICE vehicles because they are so much simpler, and as soon as EV manufacturers start to hit economies of scale (which we are starting to see happening now) ICE manufacturers will be toast. It has nothing to do with environmental concerns, it will be simple economics.
It’s not only Toyota that is likely to go under. Every other large ICE company such as VW, Ford and GM are at great risk too.
“Every other large ICE company such as VW, Ford and GM are at great risk too.”
I suspect many of these companies will simply buy up – or into – existing EV brands (even Toyota, with its massive debts, probably has a pretty good credit rating when it comes to loans…especially if that loan is to buy up an already functioning EV production line).
I’m not sure that strategy will work in this case. There are around 200 EV manufacturers in China today. It is already an overcrowded market. We don’t hear of them here because, with the exception of a few like BYD and MG, they only sell into the domestic Chinese market (which is the largest car market in the world). China is a command economy, though, and I think it highly unlikely that the Chinese government will allow foreign companies to come in and buy up Chinese manufacturers. If anything, it will be the other way. It’s been that way around for a while: Chinese companies buying up European marques. MG is a prime example. Domination of the global automotive market is something that China has been aiming at for quite some time.
I know everyone loves to hate on Tesla because they love to hate on Elon Musk, but the unhappy reality is that currently, Tesla looks like being the only Western company likely to survive into the EV age (unless, as will probably happen, the mug tax payer ends up keeping the legacy makers afloat again, as they have done so many times before).
I used to be Toyota loyalist because of their reliability and their once innovative Hybrid engine technology
In vain did i wait for a “soon to arrive” Toyota EV option
oh well, i am now a happy driver of a Hyundai vehicle which i love
bye Toyota 🙂
I know that many people hate Musk (and assume, therefore, that he has contributed little to the development of the Tesla EV), and there have been build quality issues with the vehicles. Many I know won’t buy a Tesla because of Musk, but I own one, and have for nearly 4 years. I have not experienced any of these problems, though I gather that those manufactured in China are considered to be better finished. But the fact is that Tesla is an incredibly efficient vehicle, and for most EV manufacturers, the Tesla is the benchmark to which they aspire to challenge. It is a great car, and it dominates in many EV markets. There is room for other EV producers, and I look forward to seeing many more on the roads. However, Tesla has a strong market position, and I doubt that any of the major ICE producers will be able to take it over.
Tesla indeed has a strong market position, albeit featuring shoddy build quality and escalating costs to repair, therefore insure. Their advantage right now is everyone else is worse.
Really? Have you ever owned one, or even driven a Tesla? I owned a Camry before this; it was a good car, but the Tesla is a better one.
It’s not so much what I think of Musk on a personality level, it’s that I’ve seen what’s happening in the places where self driving cars are legal, how many people have died due to the Tesla software screwing up, then his public reaction to those deaths. I’m completely unable to find any trust in the Tesla brand.
Off topic, but we could use some kaizen on the Constitution.
There is currently a 12+ month waiting list for a new Prado.
Yep,and 15 months for a RAV 4 hybrid
Waits on lots of Toyotas are long – that this article neglects to mention the supply issues that have applied since the onset of Covid is not a good sign that the author understands the issues.
How come BYD are able to get their act together then?