Tom Sullivan
President and Director General
Toyota Motor Corporation
View from the Top

Japan, Mexico Enjoy Shared Success

Thu, 09/01/2016 - 12:45

Q: What strategy has Toyota employed to boost the popularity of its vehicles here?

A: In our 14 years in Mexico, we have significantly increased our market share and are now the fifth best-selling company in the country. Our position among market leaders is the result of our five-axis strategy. This focuses on providing the right product, at the right price to the right market. It considers the strategic actions our management must follow to turn Mexico into a profitable country, as well as understanding and appreciating all people involved in Toyota Motor Sales de México. Our strategy places high importance on empathy and understanding between the working needs of both the brand and the dealer, as well as on the implementation of the brand’s philosophy.

Toyota reached a new record with 84,779 vehicles sold in Mexico in 2015, almost 22 percent more than in 2014. When the company made its debut in 2002, we presented a portfolio with only four models: the Corolla, 4Runner, Matrix and our iconic Camry. Today, we have a strong portfolio of products and services integrated by 16 models that appeal to every segment of the Mexican market. Our most popular models in 2015 were the Corolla, RAV4, Yaris Sedan and our Hilux pickup and we expect similar trends for 2016. We also have seen a renewed interest in hybrid vehicles. During the first half of 2016, one of our most successful models was the Prius, selling 2,103 units.

Q: How is Toyota adapting to meet the most common demands of the market?

A: Mexico is a price-sensitive market in which customers look for the best value for money but the diverse automotive portfolio they can access has made them more quality-oriented. Customers look for specific features on the vehicles they buy. Most drivers want cars with fog lights, alloy wheels, chrome finishes and LED headlights. They are also demanding technology-integrated vehicles with quality sound systems, Bluetooth or improved connectivity. Overall, focus on total cost of ownership has increased as buyers consider maintenance costs, insurance and resale value, as well as all the irregular expenses the vehicle will incur through its useful lifetime.

Mexico is mostly a compact vehicle oriented market but our subcompact vehicles and SUVs are top sellers in their segment, mostly because of their entry price. The segment’s evolutionary pattern has departed from its traditional course. Subcompact drivers do not move to compact vehicles and then to an SUV. Customers with subcompact vehicles are now upgrading to mini-SUVs and compact car owners can now choose among a variety of small SUVs.

Q: What strategies are you following to promote the advantages of hybrid vehicles in Mexico?

A: We are excited to see that Mexico is open to new technologies. Consumers are looking for vehicles that have maximum efficiency and are environmentally friendly. For the time being, our only hybrid vehicle in the country is the Prius, which is one of our most successful models. Since its launch in 2010 until June 2016, we have sold 5,284 units in Mexico. In June alone we sold 902 units. This shows how open and receptive the Mexican market is to hybrid technology and our strategy is to spur this growth in the coming years.

The development of hybrid cars is a priority for us. Our prowess in hybrid vehicle technology converted Toyota into the top-selling hybrid carmaker in the world. We have sold more than 9 million hybrid vehicles worldwide since we first introduced them to the market in 1997, with the Prius accounting for 3.5 million units. Toyota hybrid vehicles have helped reduce 67 million tons of CO2 emissions, which reflects our company’s commitment to the environment and our contribution to building a better world.

Q: How do you maintain the same quality standard throughout your entire distribution network?

A: Aftersales service is essential to our business strategy. All Toyota dealers in Mexico have the infrastructure, availability of spare parts and technical capacity to perform maintenance services for any of our models. We also provide an effective appointment system. When our customers take their vehicles in for service, an advisor is already waiting for them and we make sure spare parts, technicians and necessary equipment are on hand to meet the delivery schedule. Our maintenance operations are cost-effective and all Toyota dealers have kept the same prices for services since 2015.

Our dealers work under the Toyota Production System and Toyota’s principles. This way, we assure that all our collaborators including dealer associates, technicians, managers or service advisors perform their activities to high standards.

Toyota’s dealer network has increased its efficiency with the implementation of a Standard Operation Process. The Toyota Motor Sales (TSM) certification has also become a competitive advantage for our dealers. It reflects an organized, high-quality operation that is constantly adapting to the customers’ needs. The TSM approach encompasses the Fix It Right concept that targets higher quality repair services to increase customer satisfaction.

Q: How have Toyota’s manufacturing operations evolved after more than 10 years in the country? 

A: Toyota’s plant in Baja California produces 50,000 Tacoma models and 200,000 pickup boxes per year. Baja California is not the only state where we have made important investments. We have just announced a project for a new plant in Celaya, Guanajuato for the assembly of the Corolla 2020. We chose Guanajuato because of its reputation regarding quality and productivity. The state has an excellent manufacturing platform, as well as a qualified workforce and participates in the most important automotive clusters in North America. Guanajuato is home to a diverse supplier base, which will lower our logistics costs. The production system we will implement in our facilities will rely on the Just-InTime manufacturing concept, hence the importance of a strong local supply.

Toyota Motor Manufacturing de Guanajuato (TMMGT) will be the first plant designed from scratch with the Toyota New Global Architecture production technology. This means it will focus on achieving growth through more efficient vehicle production, while taking advantage of the existing infrastructure in the region. This plant will generate approximately 2,000 jobs and will have the capacity to produce close to 200,000 units per year beginning in 2019. TMMGT represents Toyota’s largest investment in Mexico and its 15th manufacturing facility in North America. Even though we have yet to decide on the exact percentages of production allocation, it is possible that the majority will be for exports. This plant reaffirms our commitment to our local team, dealers, partners, suppliers and customers and we look forward to shared future success. Mexico is a key piece for our global strategy and we are pleased to be witnesses to the country’s consolidation and development.