Tom Sullivan
President and Director General of Toyota Motor Sales de México
Toyota Motor Sales
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View from the Top

Betting on Hybrids Does Pay off

Sat, 09/01/2018 - 12:29

Q: What strategies have propelled Toyota Motor Sales to its 6.8 percent share in the Mexican automotive market in 2017?
A: Mexico’s automotive industry has experienced noteworthy growth in terms of production, exports and domestic sales in the last few years and the sector has played a key role in the country’s economy. Toyota is pleased to be part of this process. We have reached this market share thanks to our clients' preference in Mexico, the efforts of our distributors, our financial branch Toyota Financial Services and our associates.
Toyota has become the fourth-largest brand in Mexico in terms of units sold by offering the appropriate product at the right price at the right moment. We have reached sustained growth in sales thanks to this strategy and plan to achieve 1 million sold vehicles in the Mexican market before the end of 2018 by covering all automotive segments with our vehicle lineup.
Q: How has the deceleration in domestic sales impacted Toyota’s projections?
A: In 2017, we set a new sales record for Mexico with 105,000 sold units. Despite the troublesome conditions that the industry faces, Toyota has posted solid results. We have achieved sustained but conservative growth rates that keep us moving forward. Reaching our sales target of 107,000 units in 2018 will be a challenge but we are ready for it. We plan to increase our product offering in some segments to continue catering to the market’s demands.
Q: What other segments of the Mexican automotive market is Toyota ready to explore?
A: The launch of C-HR signals our entrance into the compact SUV subsegment. We have also launched Prius C, which is both the first hybrid subcompact in Mexico and the most affordable hybrid option in the domestic market. This launch follows the success that Prius has had in Mexico. The positive results of this strategy are palpable. We grew our vehicle sales by close to 1 percent in 1H18 compared to the same period in 2017, which we consider a significant achievement given the contraction that the market faced during this period.
Q: What role will sustainable mobility have in Toyota’s long-term plans?
A: This trend is very important to our operations. In Mexico, we have become leaders in the hybrid segment. In 1H18 alone, Toyota marketed over 5,000 hybrid units in Mexico and our sales target for 2018 is 10,000 hybrid units. Additionally, as part of our “Project Portal” strategy, Toyota has taken its fuel-cell technology beyond light vehicles and implemented it in a cargo truck. This vehicle offers 670hp and torque of 1,796Nm. It has an autonomy of 320km and can carry 36 ton. The company also plans to build the first hydrogen and renewable-energy generation plant, called Tri-Gen. By 2020, this plant will produce 1.2 ton of hydrogen to support fuel-cell vehicles and 2.3MW of electricity.
Toyota’s global vision is to reduce its vehicles’ CO2 emissions by 90 percent and by 100 percent in its manufacturing operations in accordance with the Toyota Environmental Challenge 2050.
Q: What is Toyota’s strategy to strengthen its position in Mexico’s green-vehicle market?
A: Prius is the first mass-produced electrified vehicle. The main goal of this vehicle was to offer an intelligent mobility solution that respects the environment. Toyota has maintained the concept of Monozukuri and total harmony with the environment since its creation and during its production. Toyota’s goal is to remain the benchmark in hybrid technology. We are convinced that hybrid motorizations are a feasible electrified option for the short term.
We decided to bring Prius to the Mexican market in 2010 with the hope that the country would eventually become ready to adopt it. The main challenge we faced was creating a market for this type of vehicle and we advocated to make this technology more affordable for Mexican markets. Today, Mexican consumers are willing to bet on intelligent and sustainable mobility. In 2017, Mexico became the third country with the most Prius sales after Japan and the US. The introduction of Prius C as a more affordable hybrid option and the launch of two more hybrids before the end of 2018 and in the first months of 2019 should help us underpin Toyota's position in this segment.
Q: What are the main challenges that Toyota has faced to introduce electrified vehicles into the Mexican market?
A: We are confident that hybrid vehicles will enter the mainstream over the next decades but the development and introduction of new technologies generally comes at a high cost and requires a strong effort to gain mass acceptance. While this is mainly between consumers and the automotive industry, many factors can support this process such as the incentives that governments offer to consumers to help them gain access to new technologies.
Q: What future do you see for the internal-combustion engine vehicle?
A: Toyota believes that hybrid technology will be the leader in decades to come, so we are working to meet our 2050 emissions goals in order to reduce the environmental impact generated by the automotive industry. The expansion of the hybrid market is also a priority for us because electric vehicles will gain importance in the medium term.
Q: How will Toyota’s assembly plant in Apaseo el Grande impact the company’s share in the Mexican and NAFTA markets?
A: The production of Tacoma pickups at this plant is expected to have a positive impact on our growth in Mexico. This plant represents a US$700 million investment and we expect to reach an annual production volume of 100,000 units there. The Apaseo el Grande assembly plant will complement the production of our plant in Tecate, Baja California. Toyota has invested close to US$1 billion since 2012 in our manufacturing operations in Mexico, which demonstrates its commitment to long-term investment in the country.
Q: What are the main challenges that limit Toyota’s growth in Mexico and how are you attacking these?
A: The NAFTA negotiations, federal elections and global economic issues offer several challenges but Toyota is and will continue to be committed to Mexico. Our plans to build an assembly plant in Apaseo el Grande, Guanajuato remain in motion and this project is already 50-percent complete.