Toyota ready to defend Mexico beachhead

The streets of this sprawling, 20-million-person metropolis long have been filled with Nissan taxis, Volkswagen commuter cars and Chevrolet Suburbans packed with VIPs and their surly bodyguards.
But Toyotas? Not so much. Maybe an occasional Camry or a Sienna minivan in the more middle-class neighborhoods of the capital and its suburbs.
Nowadays, though, Toyota Prius sightings are commonplace. It’s exempt from government regulations that curb autos during smog alerts, gets great mileage in a nation that just ended gasoline subsidies and has space-age looks.
So far this year, the Prius is easily outselling all comers in the “luxury” car segment, which, in a developing nation such as Mexico, includes the Honda Accord, Toyota Camry and VW Passat.
The sudden visibility of the Prius is symbolic of Toyota’s larger ambitions in Mexico. It is now the No. 4 brand by market share after years as a minor player, and it is more than doubling its modest manufacturing footprint.
“It truly has been a great year in terms of sales and has also been a great year for us in terms of manufacturing,” Luis Lozano, director of government and industry affairs for Toyota de Mexico, told Automotive News last month. “We are in full growth mode in pickups, and that reflects Toyota’s interest in Mexico.”
Toyota’s sole Mexican plant, near Tijuana, is in the final phase of expanding output of the Tacoma pickup to 160,000 vehicles per year from 100,000, said Mike Bafan, president of Toyota de Mexico, who oversees manufacturing.
Toyota’s second assembly plant in the country is under construction in the central state of Guanajuato. It was slated to make the Corolla, but that changed in August, when the company said it will make the compact sedan at a new U.S. plant with Mazda and refocus Guanajuato to make even more Tacomas in late 2019 or early 2020.
“One of the things we’ve continued to do is navigate through a very dynamic market lately, and demand for trucks and SUVs is on the rise on both sides of the border,” Bafan said.
Good timing
Toyota came relatively late to Mexico, setting up shop 15 years ago. The roots of the Detroit 3, VW and Nissan go back at least half a century.
But Toyota’s timing has been good. Auto sales in Mexico have doubled over the last six years to a record 1.6 million in 2016. And Mexico is a critical partner in the North America auto industry.
Mexico is now the No. 12 auto market in the world, the No. 7 producer of light vehicles and the No. 4 exporter, according to industry figures.
Toyota has been breaking its own sales records almost on a monthly basis. It captured 6.8 percent of the market through September of this year, besting its 6.5 percent share for all of 2016, according to the Mexican Automobile Distributors Association.
Over the last decade, Toyota has about doubled its sales volume, hitting 105,000 vehicles last year, even as new arrivals shake up the status quo. Hyundai opened its retail network in 2014. Kia did so a year later.
Since 2015, Toyota has leapfrogged two traditional market leaders: Fiat Chrysler and Ford, according to the distributors association. It now trails only Nissan, General Motors and Volkswagen, all of which make multiple models in Mexico.
Lozano said Toyota’s market growth did not come from some overarching plan to reach a specific spot on the sales charts.
As the brand filled out its lineup, solidified its dealer base and focused on the customer experience year after year, sales grew.
That said, Toyota intends to continue adding models and defend its market position as competition intensifies. “The strategy is to have competitive vehicles in all segments,” Lozano said.
The automaker is pretty much there with 16 models currently, from the subcompact Yaris to the Sequoia large SUV. But new offerings and options will come next year, including a diesel engine for its Hilux compact pickup, which is the brand’s volume leader in Mexico, Lozano said.
Toyota also will import the C-HR, its first subcompact crossover, to take on the locally made Honda HR-V, Chevy Trax and Nissan Kicks.
The surprise surge in Prius sales from a few hundred vehicles per year at the start of the decade to around 4,600 so far this year has spurred Toyota to import its smaller sibling, the Prius c.
Toyota’s place in the market will be tested as competition heats up and sales plateau, given that Mexico has gone through a huge growth spurt. Inflation and interest rates are on the rise.
Newcomer Kia has moved into seventh place on the sales charts, with 5.7 percent of the market through September, while Hyundai is No. 10, with 2.9 percent.
Guillermo Rosales, co-director of the auto distributors association, sees the market flat this year at between 1.59 million and 1.62 million vehicles. It’s likely to continue in a similar range until 2019.
By then, Rosales predicted, the recent inflation spurt should be squeezed out of the economy, and Mexico’s youthful demographic should drive the industry — and its winners — to new heights.
Fuente: Auto News