The shift in consumer preferences from cars, specifically sedans, to trucks and utility vehicles has been an ongoing story for years, although it’s been at the fore since precipitous drop in gas prices a few years back.
Trucks and utes are outselling cars at a rate approaching 60/40 after crossing the 50/50 mark a few years back. Now, automakers are trying to figure out how to handle the growth of ute sales that are driving the new ratio.
In fact, so pronounced is the move that America’s best-selling car for the past 15 years, the Toyota Camry, is now being outsold by the new RAV4. In April, the Japanese automaker sold 329 more units of the little ute than the family sedan. It was the second time this year that it has happened.
While some executives and industry observers are trying to determine what it all means, at least one executive had a handle on it early on. Toyota’s U.S. auto operations chief Bob Carter began saying in January that he expected the Camry, which is Toyota’s top-selling vehicle in addition to the biggest selling car in the U.S., would fall behind the RAV4 this year.
(Toyota’s earnings tumble 21% last quarter. Click Here to find out why?)
The Toyota Camry has been America’s best-selling car for 15 years. Vehicle sales in the U.S. have been been setting annual records for each of the last three year, including last year’s at about 17.5 million units.
Much of that has been in trucks and utes. So while the RAV4 nosing out the Camry may seem like a good thing to some, it causes concern, not about Camry sales, but about compact vehicle sales.
During the company’s quarterly earnings presentation, Toyota President Akio Toyoda expressed concern about the company’s product line-up while announcing a 20% drop in profits.
(Toyota looks to build hydrogen semi-truck, use it to reduce smog at L.A. ports. Click Here for more.)
“I feel a strong sense of crisis about whether or not we are actually executing car-making from the perspective of the customer in all Toyota workplaces — from development production, procurement and sales, all the way to administrative divisions,” he said during the presentation.
In short, Toyota needs to do a better job of delivering what customers want, but shortly after, he suggests that the company may be unaware of what customers want – at least in the U.S.
“I believe that making ever-better cars starts with compact cars,” he said.
Toyota is hoping that it will be able to boost momentum, even in a declining U.S. market, by shifting more of its production to SUVs and other light trucks. A month ago, it announced it would add 100,000 light trucks to its American production schedule this year.
(US auto sales fall hard in April. Click Here for the story.)
In Japan, where gas is more than $4 a gallon and in Europe where the price is more than $6 in some countries, a better mousetrap is likely needed, but in the U.S.? The company is going to have to find a way to build more RAV4s and fewer Corollas.