Toyota Motor Corp. is no stranger to the pickup truck market. Its Tacoma is the long reigning sales champ in the midsize category. But it is facing stiffer competition from a new generation of General Motors pickups and the return of the Ford Ranger to the U.S. auto market.
Jack Hollis, the sales chief of Toyota’s U.S. division, sat down with Trucks.com to discuss the future of the pickup market, its plan to keep Tacoma on top and why consumers are turning to bigger, more capable vehicles. Here is an edited version of the conversation.
What is Toyota's plan to keep your Tundra large pickup moving along?
Sell more Tacomas. We look at Tacoma and Tundra as both really important. We need to continue to be really strong in the midsize or smaller size pickup truck because it's an area that we dominate. Whereas Ford is dominant in full-size, we're dominant in midsize. We need to maintain our strength in what we sell, what we do well, the Tacoma.
We're working on a new Tundra. But, how are we going to compete this year? We're going to compete with the truck that we have. With the next generation truck, we will grow our business, we will grow the footprint, we will grow in volume. But that's down the road a little bit to be actually going into details on.
Will there ever be a diesel engine option for Tundra?
There is definitely consideration. We're considering it for more than just Tundra and Tacoma. At this point, there has not been a finalized plan to go forward, but diesel is definitely an option that we are considering for implementation on multiple products.
With the Ford Ranger back in the midsize segment is there room for growth?
There's room in both the full size and midsize segments. When you look at it, you have a new competitor, which almost always rises the whole market place. That's what I think Ford Ranger will do.
Ford has another challenge because they were in, then they abandoned it, now they’re in again. Are they going to stay in? Who knows what they're going to do. The consumer has to decide what they want to do at that point. At Toyota, the good news is we never abandoned them. We were always there.
I'd rather have the best competition out there and then grow from that. And more competitors almost always prove to have more than buyers. There is more marketing is in place, more consideration by more people. You usually see the entire ocean lift and all boats rise.
How many pickup trucks does Toyota plan to sell this year?
We expect to sell between 340,000 and 350,000 Tacomas and Tundras in 2018. We have a combined number because we can move production [of Tacomas and Tundras] in San Antonio to maneuver where we think the market places are. And we increased production out of the Baja plant. They will be able to bring us quite a few more Tacomas.
What does a slowing auto sales environment mean for Toyota?
First, when the sales flatten or decrease – if you go back in history, even up to 25 years plus – you'll find Toyota picks up market share. That's consistent in every cycle, and it usually lasts a minimum of that first year, into the second year. The question is how long that lasts and how the market place flattening or decreasing occurs. Now, I'm not saying specifically in trucks. That's across the entire lineup.
Toyota stays very consistent with our production and marketing and sales plans, such that depending on the segment changes, we'll pick up market share in one, two, or three different segments. We saw that [in 2016]. Toyota division was a 12 percent market share, this year we ended at 12.3 percent.
RAV4 sold 407,600 units last year, best of any vehicle not a pickup. But it was launched in 2013, so it’s starting to age.
Well, I tell you, if it's starting to age and we keep picking up sales, I'm going let that sucker age.
When can we expect to see the next great RAV4?
The next RAV4 is not so much about when, because we don't have any timing yet to announce, but it is about what we want to do with the product. RAV4 is going to [get better] driving and handling and a little bit more dynamic styling. Part of the reason we don't want to talk too much about the next one is there is no reason to talk about something when what we're currently doing is still growing in popularity and strength.
But we're working on it, I can tell you that.
You’ve debuted utility concepts – the FT-4X in New York and the FT-AC in Los Angeles. Will one of those turn into some kind of extreme lifestyle trim for RAV4?
Oh, it truly could. Our company is growing a true vehicle concept type of practice. There are elements of FT-4X and FT-AC that could make their way into RAV4. But also into multiple of our SUVs as well. Potentially, some sort of combination or modification to either one of those could be a new entry into the SUV world for Toyota.
The FT-4X was outstanding in New York. The feedback was way above our expectations. It makes you start to think like we did with FJ Cruiser. It was so popular we had to make the car. FT-4X is in that similar boat where it's like, “Wow, it's so good. Maybe that concept is the hit itself.” Then we came up with FT-AC and people said, “Wow, that may even be stronger than FT4X.”
The reason for the proliferation of SUVs, is that people see their vehicle as an extension of their personal life or desires, and so they want a little bit more utility. They want to see themselves being more active. That's not just younger people, that's all people.
Consumers keep drifting further into the light truck segment, pickups SUVs and crossovers.
The 2017 number for the industry was a 65/35 percent split. Toyota was at 58/42. We have a 7 percent gap. If we can continue to produce more Tacomas and 4Runners and RAV4, there’s room [to grow] because the market demand is greater.
Do I think it's going to stay there? The [industry split] in December was actually 67/33. I don't see it dropping below that, which is why Toyota is [still] investing in the Camry, Avalon, Prius, Yaris and Corolla.