Market Insight: Toyota’s Camry hybrid shortfall

TOYOTA Australia will build even fewer Camry hybrids at Altona this year than it did in 2010, when production fell almost 30 per cent short of its target of 10,000.

Only 7184 Camry hybrids were produced in its first full year, when the overall new-vehicle market was back at million-unit sales strength and large orders from major fleets and pent-up demand from private individuals were all fulfilled.

This year, the build rate for the hybrid is down further – to 4370 units as at September 1, including 610 shipped to New Zealand – as the company claws back from significant production setbacks in the wake of the devastating March 11 earthquake and tsunami in Japan.

Industrial action also halted vehicle production at the company’s Altona plant on Friday, and looks certain to cause further disruptions as negotiations continue over a new pay deal and more stoppages are planned.

Year to date, domestic Camry production (ex-hybrid) is also down – to 10,444 units – while domestic Aurion production is lineball with last year, at 7640 units.

Full-scale production of the petrol-electric Camry began in December 2009, with Toyota Australia figures showing 460 units were built at the company’s Altona plant that year.

Left: New Camry. Below: Production at Altona plant.

However, the 7184 produced in 2010 were well below management expectations and, to some extent, appear to have come at the expense of domestic petrol-engine Camry production, which fell to 18,254 units last year – its worst Altona build rate for the model in well over a decade.

The company was anticipating some cannibalisation of the petrol-engined Camry with the hybrid’s introduction, but last year non-hybrid Camry production for Australia fell 1700 units from its GFC-laced 2009 result of 19,953 to set up a third successive downturn (as exports began to recover).

So as overall Camry sales climbed 20 per cent, or 4168 units, last year over 2009 to 25,014 units, it was clearly the hybrid’s introduction – albeit at lower than expected build rates and sales – rather than the regular Camry that was the key factor.

Camry sales are back down significantly (23.1 per cent) this year, due in part to supply issues stemming from the Japanese earthquake, but even with the new-generation model coming soon, Toyota looks to have a monumental task ahead of it to routinely achieve 10,000 incremental sales from the hybrid over the petrol model while also maintaining overall production levels.

As Toyota Australia works on returning production at Altona to the record 148,931 units it achieved in 2007 – which included 26,985 domestic Camrys and 24,345 domestic Aurions – the hybrid variant should be expected to lift that to around 160,000, all things being equal.

But nothing is that simplistic. Exports markets have diminished since 2007, hurt by global economic pressures and, more recently, local exchange rates. Rival Toyota plants are an increasing threat, but at the same time the Australian subsidiary is working on a plan to take on Thailand’s Camry production of around 30,000 units.

And the long-mooted third model line for Altona remains a consideration.

No less significant is the need for Toyota to lure many more Australian consumers back into its showrooms to realise its lofty 25 per cent market share aspirations for the company (it finished last year at 20.7 per cent but has taken a hefty quake-related hit this year) and to cement the future of its Australian manufacturing operations.

As GoAuto has reported, the new Camry – due in showrooms in November – will play a crucial role, both mainstream and hybrid. The latter launches in the first quarter of 2011, and Toyota has already revealed it is rethinking its overall hybrid marketing strategy in an attempt to win more sales.

The all-new Aurion, to be launched next April, will be no less significant.

The company is sticking with its two-pronged Camry/Aurion strategy with the new generation, but management must be worried about Aurion’s standing in the marketplace.

While we have previously documented its sales decline (now down 25.7 per cent YTD), Altona production figures also show how domestic Aurion production fell sharply in 2010 for the third year in a row, hitting 11,357 units – down from its record 2007 result (its first full year) to 17,403 a year later and 13,245 in 2009.

As at September 1, Aurion production for the local market is at 7640 units for the year, which is around the same build rate as last year.

Aurion’s plight highlights the continued strain on the Australian large-car market and, as with the regular Camry, throws up the question of the extent to which the hybrid Camry is stealing its thunder, given Aurion’s close connections to the mid-size model and Toyota’s strategy of launching the hybrid with direct comparisons to the Holden Commodore and Ford Falcon.

Toyota will be looking for significant export growth from Aurion when it enters its new generation. After exporting 12,695 Aurions in 2007, the shipping news turned sour in both 2008 and 2009 with annual exports of 9350 and 8243 respectively, only to improve last year with 12,117 units as Camry exports also picked up, reaching 69,969 after falling to 54,896 in 2009.

So far this year Toyota has exported 6246 Aurionss, while Camry exports are at 39,029 over the same period.

Total output from the Altona plant over the past decade – which included Avalon until 2005 – has fluctuated but nonetheless grown in substantial terms, from a low of 86,540 (2002) to breaking through 100,000 (with 113,614 units) in 2003 and then holding that mark until 2007, when Toyota’s exports boomed and Australian buyers responded well to the redesigned Camry and the Aurion (which succeeded the Avalon and Camry V6) launched the previous year.

Last year, Toyota produced 118,881 vehicles - up from 96,797 in 2009.

This year, Toyota expects Altona production to reach only 88,000 units as a result of the devastating Japanese earthquake and the changeover to the new Camry – as at September 1, it had built 67,490 vehicles – while next year it is aiming to break through 100,000 units and push on upwards from there.

To put things further into perspective, Holden production has fallen dramatically from 119,246 units in 2008 to 66,724 in 2009 and 66,245 last year. Of those, exports have plummeted from 56,235 in 2008 to just 6922 in 2009 and 7817 last year.

The company said it was unable to ‘readily’ break the figures down into body styles or models, such as Commodore sedan, wagon, utility and long-wheelbase vehicles but they clearly show that Holden has lost significant export volume to the Middle East and the United States.

Of course, production is this year ramping up with the Cruze small car now rolling off the line at Holden’s Elizabeth assembly plant in Adelaide, along with police cars for Chevrolet in the US.

Production at Ford Australia’s Broadmeadows plant in Melbourne, meanwhile, fell from 61,712 cars in 2008 to 54,557 in 2009, but climbed back slightly last year to 57,362 units. Of these, exports (primarily to New Zealand) accounted for 4041 units in 2008, compared to 2794 in 2009 and 3657 in 2010.

Breaking the figures down further, Falcon sedan production has remained fairly steady at around 30,000 units a year, with the Territory SUV and Falcon ute accounting for around 11,000 to 13,000 units each.

Specifically, in 2008 Ford built 29,267 Falcon sedans, 6856 Falcon wagons, 12,791 Territorys and 12,798 utes. In 2009, Falcon sedan and wagon volume fell to 27,824 and 4630 units respectively, while Territory and ute accounted for 11,181 and 10,922 units respectively.

Last year, Ford built 30,130 Falcon sedans, its final 3133 Falcon wagons (discontinued in June), plus 13,203 Territorys and 10,896 utes.