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Toyota races to match model mix of Tundra to the market

Mark Rechtin | Automotive News / April 16, 2007 - 1:00 am


NEW YORK -- Three months into the launch of its redesigned Tundra, Toyota is scrambling to revamp its model mix and make a series of other fixes on the run.

Toyota executives admit they have made missteps in their first venture into the full-sized pickup fray.

"As we try to go from 5 percent share to 10 percent segment share, we are learning the hard way," Jim Farley, Toyota Division vice president of marketing, said at the New York auto show.

Toyota is selling more CrewMax units than it can supply. Demand for the top-dog 5.7-liter V-8 also is outstripping supply. And Toyota is cutting production of standard-cab models because it is selling fewer than expected.

But a lot has gone right since the Tundra's launch in February. The company sold 13,196 Tundras in March, 12 percent above sales of the old Tundra in March 2006. Based on availability and inventories, Toyota says that it's on the right track, and that the Tundra will be selling at its planned 200,000 annual pace by summer.

But in studying its miscalculations, Toyota is noticing some intriguing trends.

The extended-cab versions represent 40 percent of sales, as planned. But the CrewMax has proved more popular than expected, said Ernest Bastien, Toyota's vice president of vehicle operations. That presents a supply problem.

The production ramp-up calls for Toyota's Princeton, Ind., plant to build the CrewMax, while the new San Antonio plant gets its feet wet with the standard-cab and extended-cab versions. San Antonio won't build the CrewMax until August.

"We didn't come to the prizefight with all our tools," Bastien said.

And by engaging in the "bar stool debate" with its 5.7-liter V-8, Toyota has sparked more demand for that engine than expected.

"The 5.7 has been 70 to 80 percent of our mix, and we thought it would be 50 or 60 percent," Farley said. "The 4.7 (V-8) and V-6 are not as popular."

On the flip side, the basic two-door model has missed its sales goals, even though it was expected to account for only 10 percent of the mix. Typical basic-truck buyers don't want a lot of extras, even when extras are rolled into the basic sticker price.

The regular cab Tundra starts at $22,935, including shipping. Chevrolet's new Silverado pickup starts at $18,760, with shipping.


Tundra's lessons
Some things Toyota has learned since launching its full-sized pickup
  • CrewMax more popular than expected
  • Standard cab models aren't moving.
  • Sales of the 5.7-liter V-8 are stronger than predicted.
  • Transaction prices vary by region.
  • Truck shoppers are Internet-savvy.
Standard goodies

Standard safety features on the Toyota include antilock brakes, brake assist, electronic brake force distribution, vehicle stability control, traction control, and seat and side curtain airbags. Most of those features are optional on domestic trucks.

But Toyota won't decontent the big truck.

"We're not taking the safety equipment off Tundra" to hit a lower entry price, Bastien said. Instead, Toyota is "backing off" production of the standard-cab model. Toyota will push budget-minded shoppers into the largest Tacoma compact pickup, he said. The Tacoma stickers from $14,825 to $25,820 including shipping.

Most frustrating to Toyota is that the number of days Tundras sit on dealer lots is higher than expected.

"Traffic counts have been pretty high, but these (buyers) will wait until you have the exact truck that they want," Farley said.

Toyota needs to do better at tracking regional inventories, so when buyers want a specific package it can get the vehicle from the regional pool to the dealer as fast as possible. Toyota customers traditionally are happy to buy from whatever the dealer had in stock. That's proving different with buyers of full-sized pickups.

More surprises

Meanwhile, transaction prices have varied. Depending upon region, Farley said, prices for identical trucks have swung as much as $2,000. Buyers in some regions appear more willing to pay for standard safety items, he said.

Another surprise: In the past, trade-ins usually accompanied about 40 percent of Tundra sales. In the case of the new Tundra, it is closer to 60 percent. Dealers are scrambling to cope with the additional used vehicles, including lots of domestic pickups.

Many of those owners owe more on their trade-in vehicles than those vehicles are worth, making appraisals and negotiations more difficult for dealers.

Toyota's Farley notes one other surprise -- the amount of Internet shopping done by full-sized truck buyers. He says online visits for the Tundra are about the same as for Camry, the best-selling car in America.

"We have changed our thinking in terms of interactive marketing for Tundra," Farley said. "We got as many eyeballs on AOL as we did for a primetime network spot. Now Internet is as important as broadcast TV."
With Crewmax's and 5.7's in shorter supply (right now), I don't think they will be eager to put good incentives on them too soon. It doesn't surprise me that the CrewMax and 5.7 are popular and may actually be the most popular, but it's surprising that Toyota thought otherwise. It's more powerful and looks like it has the same or better gas mileage than the 4.7 in most configurations.
 

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Wow. It looks like the Toyota rep got all of his talking points directly from this forum!
  1. The crewmax is more popular than expected
  2. Truck buyers don't just want to pick from what is on the lot.
  3. The regular cab is overpriced/overfeatured
  4. The 5.7 is the engine of choice
You could have known all of this information in January if you just read this forum.
 

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What I don't get is why they did the 4.7 and the 5.7 the way they did. If the gas mileage is basically the same most people will pay the 1300 extra for the bigger engine. If nothing else the it would be a much easier trade-resale in the long run. Why couldn't Toyota have put the 6 speed with the 4.7 and increase the mileage above the 5.7? Maybe that would get buyers looking at MPG and justifying the 4.7 if they really do not need the power. It just seems like a no-brainer to get the 5.7 so I don't see why Toyota is surprised about the engine choice.
Coming in May CM Slate 5.7 4X4 Graphite-most of the bells and whistles!
 

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Exactly true. The reg cabs are priced much higher than the competition, even the V6. Reg cabs are also loaded with options and features driving their prices up. They need to make a 5.7L Reg Cab base work trucks, with minimum features and options to get the price down so businesses will buy them. Reg cabs with 5.7 are not widely available or abundantly available at the dealerships. Usually dealerships here in my area have one 5.7L with the tow package, tow miirors, standard bed. Not much selections here. That's why they don't sell at all. If, reg cabs are abundant here, I would have gotten one a month ago. The dealership I went to the first time just called me and they said that they are ordering the reg cab that I wanted and will notify me when it arrives. I didn't even tell them to order one. I just told them that I'll wait till the end of the year or early part of next year to get one. Hopefully by that time, there'll be plenty of reg cabs to choose from with reasonable price. If they stop producing 5.7 reg cabs, they'll be making another big mistake.
 

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Typical basic-truck buyers don't want a lot of extras, even when extras are rolled into the basic sticker price.
AMEN !! Now stop trying to force consumers to purchase DC's and CM's with "WORTHLESS" Sliding Rear Glass.Talk about worthless as tits on a Boar Hog :rolleyes:

"Traffic counts have been pretty high, but these (buyers) will wait until you have the exact truck that they want," Farley said.

Thats right Farley !! People dont want your overpriced vendor supplied bolt-ons forced into the sticker of a Truck they will purchase.Want to butter someones bread try the consumer first,then pay off your vendor. Not the other way around.
Aftermarket vendors are going to stomp a mud-hole in your Options ASSet's. :devil: The Smart Consumers will greet them with open wallets.

You try and sell a work horse in Texas it needs to look like a work horse !Save the limited for the City Slickers and build stripped down Work Trucks for the working class.
Toyo has a good product,but force feeding isnt very smart marketing .
TOYOTA's Frog better gets some wings ........

:devil:
 

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CrewMax more popular than expected
Standard cab models aren't moving.
Sales of the 5.7-liter V-8 are stronger than predicted.
Transaction prices vary by region.
Truck shoppers are Internet-savvy.

Like it takes a freakin Genius to figure that out!! Jee wizz
 

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Dealers are scrambling to cope with the additional used vehicles, including lots of domestic pickups.

Many of those owners owe more on their trade-in vehicles than those vehicles are worth, making appraisals and negotiations more difficult for dealers.

Have you heard me say that before??-Or was that when I was on one of those "other" websites?-I can tell you first hand domestic truck buyers are coming in becouse I appraise thier junk! I don't know how many I've sent packing w/6-10G'S flipped. And when you Tell them all these rebates hurt them and all years before-they look at me like I'm nuts.:eek:
 
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