Toyota News: Toyota's U.S. CEO Believes Car Sales Are Close to Bottoming Out

[William Maley]

The past couple of years has seen a lot of talk about consumers are turning away from cars towards trucks and utility vehicles. U.S. automakers have responded to this trend by announcing cuts to their car lineup - General Motors being the latest one. But other automakers are being more cautious.

Jim Lentz, CEO of Toyota North America told a gathering at the Detroit Economic Club last week that car sales are reaching the point of bottoming out - just under 30 percent in November sales. Unlike the American brands, Lentz isn't giving up on cars as they represent more than 4 million compact, midsize, and near-luxury cars sold to buyers.

"There’s no way I’m going to walk away from that. We are always going to have a bias toward passenger cars,” said Lentz.

The Associated Press reports that sales of passenger cars "are on pace to be 800,000 vehicles below 2017, while truck and SUV sales should increase by the same amount."

Source: Associated Press

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[G. David Felt]

I am going to disagree with Toyota CEO.

I first think the recession we have starting is going to cool sales off further and that especially includes cars sales at the bottom end as lower income workers become even more frugal with their money due to credit card debt.

Second, I think more and more people who bought in the last 1-3 years will also hold off or if in a lease renew to a like vehicle or buy outright the auto. I hear plenty of people talk about how they would like to reduce the cost of maintenance of their auto. EVs seem to be that next step, people I think are going to hold off on buying to move to an EV.

Third, I am seeing more cities focus on inner and outer city mass transit and with the push for denser living, I suspect we will see more use in mass transit which will cool or keep even auto sales. I actually do not see them ticking up over the next 3 to 5 years over what they have been.

Toyota very well could see a gain in car sales but that will be only due to Ford and GM leaving the car market to focus on Trucks / SUV / CUVs with traditional ICE and Electric power trains.

[Drew Dowdell]

I think there is further to go simply because I think a recession is on the way.  Just look at the list of vehicles on the chopping block:

Sonic, Cruze, Impala, Fiesta, Focus, Fusion, Taurus, 300, Charger, Lacrosse, CT6, Volt

Camry seeing a reduction in production. Accord down, Civic down..... 

It is seismic. 

Edited December 10, 2018 by Drew Dowdell
missed some

[A Horse With No Name]

33 minutes ago, Drew Dowdell said:

I think there is further to go simply because I think a recession is on the way.  Just look at the list of vehicles on the chopping block:

Sonic, Cruze, Impala, Fiesta, Focus, Fusion, Taurus, 300, Charger, Lacrosse, CT6, Volt

Camry seeing a reduction in production. Accord down, Civic down..... 

It is seismic. 

Agree on the scale of what is happening. 

[daves87rs]

2 hours ago, dfelt said:

I am going to disagree with Toyota CEO.

I first think the recession we have starting is going to cool sales off further and that especially includes cars sales at the bottom end as lower income workers become even more frugal with their money due to credit card debt.

Second, I think more and more people who bought in the last 1-3 years will also hold off or if in a lease renew to a like vehicle or buy outright the auto. I hear plenty of people talk about how they would like to reduce the cost of maintenance of their auto. EVs seem to be that next step, people I think are going to hold off on buying to move to an EV.

Third, I am seeing more cities focus on inner and outer city mass transit and with the push for denser living, I suspect we will see more use in mass transit which will cool or keep even auto sales. I actually do not see them ticking up over the next 3 to 5 years over what they have been.

Toyota very well could see a gain in car sales but that will be only due to Ford and GM leaving the car market to focus on Trucks / SUV / CUVs with traditional ICE and Electric power trains.

totally agree.....and adding what Drew said..we have not even seen the bottom yet.

add the upcoming recession, and things deliver ugly.....

[A Horse With No Name]

15 minutes ago, daves87rs said:

totally agree.....and adding what Drew said..we have not even seen the bottom yet.

add the upcoming recession, and things deliver ugly.....

People are not going to be in a buying mood, and yes, things could get ugly. 

[balthazar]

Here's the other thing; toyota is chained to cars - that's where their volume is. Their CUVs sell well but their trucks do not, and they can't figure out how to get around that, so cutting cars to shift (partially) to trucks wouldn't work for their business model.

[A Horse With No Name]

57 minutes ago, balthazar said:

Here's the other thing; toyota is chained to cars - that's where their volume is. Their CUVs sell well but their trucks do not, and they can't figure out how to get around that, so cutting cars to shift (partially) to trucks wouldn't work for their business model.

The Tundra really is a pig compared to the F150, Silverado and Ram. I have no idea why they have such high residual value, or find buyers at all for that matter.

Tacoma has a cult following, and is the complete opposite situation.

[riviera74]

59 minutes ago, A Horse With No Name said:

The Tundra really is a pig compared to the F150, Silverado and Ram. I have no idea why they have such high residual value, or find buyers at all for that matter.

Tacoma has a cult following, and is the complete opposite situation.

Toyota makes relatively few Tundras compared to demand for them, hence the high resale value.  Ditto for Tacoma.

Toyota knows that the RAV4 and the Venza and Highlander are rolling in sales and profits, right?  They can slash Camry and Yaris and Corolla production and make more $$$$ right now if they wanted to.  RAV4 is the highest-selling (non-BOF) vehicle on the road right now.

[regfootball]

I think manufacturers had some models they hoped would sell more, become niche sellers, like a Taurus.  But hello, the Taurus was fresh in 2010 so you have to change models much more quickly than 8 years or whatever.  

Mfr's have to act faster to keep up with hot sellers and so I think they want to trim number of models and put more resources into nailing volume segments.  Or segments with more margin, or both.

Still, as always happens, gas goes up in price, the market changes, and then customers respond.  We got the new Focus and new Cruze in 2011/2012 and all the luxury compact cars.  People embraced those and now after an ownership cycle of pricey gas and stagnant economy, we have cheap gas and good economy and so people want to buy Expeditions and pickups again.

Bob Lutz i think said people will buy as large as they can afford and that is CUV's, trucks and SUV's because big sedans are taboo.

Aging population, no one wants to bend down to get into and out of cars, this also why sedans are losing sales.  Not everyone wants an SUV but it is true part of the reason for SUV / CUV sales is the easy to get into factor.  20 years ago, not many choices for taller sitting vehicles.  Now its more the norm and more people are making the choice for it.

"Sonic, Cruze, Impala, Fiesta, Focus, Fusion, Taurus, 300, Charger, Lacrosse, CT6, Volt"

those are all cars with limited interior space or they are low riders that people don't want to get into and out of.  Just by that nature the numbers would go down if still on the market.  We can be simplistic and merely say if Chevy pulls the Impala, the Blazer is really it's replacement.  Ford will lose Fusion and Taurus but now the Edge may just double in volume.

Compact CUV's give the illusion of space due to sitting high but their cargo holds with seats up are actually not equal to many sedans.  I see where compact SUV segment tops out in sales and the Blazer, Edge Murano segment gets cheaper access to entry and more market volume.  This is a segment too where A Buick is needed, a 2 row version of the Enclave / Enspire whatever.  Note Honda recognizes this and has the Passport.  2 row larger crossovers without the third row.

 

Edited December 11, 2018 by regfootball

[G. David Felt]

@regfootball Totally agree with what you have stated, I know way too many 50 year olds up to baby boomers who hate having to do squats to get into and out of a car and just want to slide their ass into the seat. My parents are perfect examples of why they love their Cadillac SRX 2004 and 2008 models. They can just slide into and out of those cars and are very happy with them.

As the US ages, tastes changes and cars are on the decline, I am hoping we will see cheaper CUVs to replace them.

[balthazar]

3 hours ago, riviera74 said:

[Toyota] can slash Camry and Yaris and Corolla production and make more $$$$ right now if they wanted to.

Did toyoto make any announcement that the yaris is going to be discontinued?
They've only moved 26K thru Nov, and that's a 39% decrease from the year before. Seems logical it's on the chopping block; all the  brought-over scion models are dead, 86/FRS has only sold 3K units/yr and that's down 40%; another car waiting to die. Lexus could happily survive on the ES & LS cars (plus the SUVs)- toyoyo has a lot of house cleaning to do.

Edited December 11, 2018 by balthazar

[riviera74]

Cheap CUVs will not happen because that is where the demand is these days.  CUVs are the reason the average selling price (for new cars) hovers around $35K right now.

[G. David Felt]

9 minutes ago, riviera74 said:

Cheap CUVs will not happen because that is where the demand is these days.  CUVs are the reason the average selling price (for new cars) hovers around $35K right now.

One Can hope for CUVs to cover the full spectrum of price points. I think the Suzuki subcompact cuv would be doing well if it was still on sale here. Just too early before people decided to move from cars to CUVs.

[balthazar]

24 minutes ago, riviera74 said:

Cheap CUVs will not happen because that is where the demand is these days.  CUVs are the reason the average selling price (for new cars) hovers around $35K right now.

THIS is why electric cars will not come down in price either, esp since they are unilaterally coupled with running solidly in the red.
Hmmm... some quick calculator work and : the 14 full electric cars available in the US right now have an average STARTING price of $43K. Not even comparable, because some -Model 3- can escalate their price by $10K or more with 3 or 4 options checked off.

So, so far; electrics are ALSO driving the price of new cars higher. The couple of trucks in the pipeline are priced well over than number, so the average is going to increase. Get ready to pay a lot more for a new car than you already are.

[ocnblu]

13 hours ago, riviera74 said:

Toyota makes relatively few Tundras compared to demand for them, hence the high resale value.  Ditto for Tacoma.

Toyota knows that the RAV4 and the Venza and Highlander are rolling in sales and profits, right?  They can slash Camry and Yaris and Corolla production and make more $$$$ right now if they wanted to.  RAV4 is the highest-selling (non-BOF) vehicle on the road right now.

How long has the Venza been out of production?  Couple years I think.

[Cmicasa the Great]

13 hours ago, regfootball said:

I think manufacturers had some models they hoped would sell more, become niche sellers, like a Taurus.  But hello, the Taurus was fresh in 2010 so you have to change models much more quickly than 8 years or whatever.  

Mfr's have to act faster to keep up with hot sellers and so I think they want to trim number of models and put more resources into nailing volume segments.  Or segments with more margin, or both.

Still, as always happens, gas goes up in price, the market changes, and then customers respond.  We got the new Focus and new Cruze in 2011/2012 and all the luxury compact cars.  People embraced those and now after an ownership cycle of pricey gas and stagnant economy, we have cheap gas and good economy and so people want to buy Expeditions and pickups again.

Bob Lutz i think said people will buy as large as they can afford and that is CUV's, trucks and SUV's because big sedans are taboo.

Aging population, no one wants to bend down to get into and out of cars, this also why sedans are losing sales.  Not everyone wants an SUV but it is true part of the reason for SUV / CUV sales is the easy to get into factor.  20 years ago, not many choices for taller sitting vehicles.  Now its more the norm and more people are making the choice for it.

"Sonic, Cruze, Impala, Fiesta, Focus, Fusion, Taurus, 300, Charger, Lacrosse, CT6, Volt"

those are all cars with limited interior space or they are low riders that people don't want to get into and out of.  Just by that nature the numbers would go down if still on the market.  We can be simplistic and merely say if Chevy pulls the Impala, the Blazer is really it's replacement.  Ford will lose Fusion and Taurus but now the Edge may just double in volume.

Compact CUV's give the illusion of space due to sitting high but their cargo holds with seats up are actually not equal to many sedans.  I see where compact SUV segment tops out in sales and the Blazer, Edge Murano segment gets cheaper access to entry and more market volume.  This is a segment too where A Buick is needed, a 2 row version of the Enclave / Enspire whatever.  Note Honda recognizes this and has the Passport.  2 row larger crossovers without the third row.

 

Love the post.. and the part I bolded.. if U guys remember was a huge factor in why I decided to get rid of my Camaro backin '13 and get my Impala.. nowadays I won't lie.. I find myself packing on more daily miles in my YUKON than I do in my Impala.. So much so that I have considered selling my Impala, because I often make myself drive it. The Yukon, being higher up.. is simply more comfortable. My ex-wife got rid of her Malibu back in '15 to get an Encore.. same reason. In fact.. many of the people I know who have traded in cars for SUV/CUVs have all commented on the fact that they no longer have to stoop, but rather they have to stretch to get in their vehicle. The Z and V, and 66 are all "fun occasional cars." My V is the most heavily used of the three and after almost 3 years of ownership she only has 10K miles on her. My Stingray before I traded her in for the Z this past March , after 4 years of ownership, had I think 14K on the odo. 

That being said.. CADILLAC should have.. and I hope reconsiders the death of the CT6, or replaces it with a CT8, because the 1000 sales per month are people who obviously still love cars. They could have easily bought an Escalade. BUT.. did the forecast for the XT6 suggest that they buyers may decide to go for a Full-Size Cadillac CUV over a Full-Size Sedan? Only difference being that the CT6 was RWD based.. and my argument would better suit if the car we were talking about  was the XTS. Because I have talked to people that say many times.. they went into the Chevy dealer looking at the Impala.. and drive off in a Traverse.  VERY similar pricing... fuel economy is the same damn near.. but then the Traverse is higher up and has more cargo

$28,020†

STARTING AT

18/28 MPG†

CITY/HWY

 

$29,930†

STARTING AT

18  /27 MPG†

CITY/HWY

We are also talking about 205,718 GM31XX sales versus 70,025 E2XXL sales. The market spoke. 

Perhaps the Blazer will take over the Impala sales, but I'm betting that it will be more in line with taking Malibu sales. I think the Equinox's success is what helped kill the Cruze.. The Bolt is to the Volt. The Malibu is to the Blazer, while the Impala is to the Traverse. Sonic is certainly to the Trax. GM might be onto something.. and this is not the same thing as in the 90s when they killed their full size Caprice/Impala, Roadmaster, Fleetwood, and Olds Custom Cruiser and replaced them essentially with Tahoe and Suburban production.. and fuel prices went back up.. and they were without many of their car sales. No.. cars and CUVs have the same damn fuel economy this time.

BTW.. U suggest that Buick needs a 2 row version of... but they already have the ENVISION. Are U suggesting a larger SUV?

Edited December 11, 2018 by Cmicasa the Great

[ykX]

True regarding the aging population.   Both my parents and my in-laws switched to crossovers because easier to get in, easier to access and more useful trunk and perceived advantage of AWD in the winter.

Even my friend who is only 40 but used to a taller vehicles, complained how hard was to get into a Mustang when he rented one in Florida.  And Mustang is not harder to get into more than any other sedan, it is not like it is a Corvette or MIata. 

[balthazar]

Aging factor may be a slight contributor, but it's certainly not driving the trend. Neither the average American's age or the average car buyer age has remotely shown the degree of change that car sales have fallen off by. This is more so preference and/or product driven.

EDIT :: average new car buyer age in 2000 was 43.7. As of 2015 it was 51.7- an 8 yr difference. Unless it's gone to 61.7 in the last 3 years, I don't see age driving car sales down to the circa 35% they are of the mix now.
The 2015 average age of the population was 36.8, BTW,

Edited December 11, 2018 by balthazar

[Cmicasa the Great]

3 minutes ago, ykX said:

True regarding the aging population.   Both my parents and my in-laws switched to crossovers because easier to get in, easier to access and more useful trunk and perceived advantage of AWD in the winter.

Even my friend who is only 40 but used to a taller vehicles, complained how hard was to get into a Mustang when he rented one in Florida.  And Mustang is not harder to get into more than any other sedan, it is not like it is a Corvette or MIata. 

I promise U after 40, especially with height.. a Mustang as a Daily Driver is as bad as anyone's Corvette weekend toy. Worse in fact.. same for Camaro. After 35 to be honest. 

[ykX]

32 minutes ago, Cmicasa the Great said:

I promise U after 40, especially with height.. a Mustang as a Daily Driver is as bad as anyone's Corvette weekend toy. Worse in fact.. same for Camaro. After 35 to be honest. 

I am 44, I am fine driving a sedan.   I drove Mustang on vacation, I was ok with it too.  I am 6'1" not super tall but not short either.  I think it is more personal than age related.  But I do understand that taller sitting position is more comfortable.  I enjoy driving my wife's crossover when we go on long trips.

Edited December 11, 2018 by ykX

[Robert Hall]

I'm 48, 6'0".  I've been driving SUVs as daily drivers for most of the last 24 years.  I drove Mustangs as daily drivers off and on from age 16 to 30, after that drove cars less and less.   I like the high seating position, headroom and ease of entry/exit with an SUV.  Never really liked trunks, always preferred hatchbacks, so that is part of the appeal of an SUV.

[Cmicasa the Great]

44 minutes ago, ykX said:

I am 44, I am fine driving a sedan.   I drove Mustang on vacation, I was ok with it too.  I am 6'1" not super tall but not short either.  I think it is more personal than age related.  But I do understand that taller sitting position is more comfortable.  I enjoy driving my wife's crossover when we go on long trips.

I'm not saying that the Impala is uncomfortable by any means.. what I'm saying is that my Yukon is more comfortable. I'm 6'3, 225lbs.. 46. I also have found that the seating position of any truck damn near is a full knee bend...

 

where as the position of most cars.. even the Taurus, Impala, Accord, CT6, CTS, E-Class, S-Class, LS460.. etc.. is a position where your legs are not fully bent. 

The seats are simply HIGHER from the floor. 

[Drew Dowdell]

Driving a crossover is more like the shape we're forced to sit in at our desks all day. 

[G. David Felt]

19 minutes ago, Drew Dowdell said:

Driving a crossover is more like the shape we're forced to sit in at our desks all day. 

Which I prefer than the Lazy Boy recliner seating. I loved my grandfather's Cadillac Brougham but I always fell asleep in that car. Way to soft for me if I was driving.

[G. David Felt]

If the news is SPOT on with predictions for a Recession that will hit hard in 2019, then Toyota is gonna be in for a shock.

https://www.nytimes.com/2018/12/10/style/2019-financial-crisis.html

5 major points from the NY Times that covers some of the same points various members here have stated.

http://fortune.com/2018/12/11/janet-yellen-warns-another-financial-crisis-could-be-brewing/

Janet Yellen Former Chairwoman of the Federal Reserve is blowing a horn about the bank bundled up leveraged loans that are being sold off to the unsuspecting and the crash this debt could cause on the US.

She has walked back her Optimism from earlier this year and now worries about the holes in the financial system that have been created by DC.

To Quote her: Yellen, now an economist at the Brookings Institution, has previously spoken out against U.S. President Donald Trump’s unprecedented criticism of the Fed’s policies. “To totally undermine these institutions that are assets to the U.S. and the globe is worrisome,” she said.

So Toyota CEO, I would be thinking TWICE about your car sales and the future growth.

I perceive a slump coming up for the auto industry and some companies just might have to declare bankruptcy.

I hope the Ford Family has been saving their Pennies as I think Ford is gonna need a bailout.

[Cmicasa the Great]

4 hours ago, dfelt said:

Which I prefer than the Lazy Boy recliner seating. I loved my grandfather's Cadillac Brougham but I always fell asleep in that car. Way to soft for me if I was driving.

Unfortunately that is the perception that some still have about Cadillac.. before they see them hit corners at .99gs

[balthazar]

RE the NYT piece, some counterpoints to consider:
• If/when the 'Blue Wave' hits; a number of it's players have floated forgiving all student debt, so that could disappear with a signature. Unfortunately, that bubble will just pop up somewhere else. But even if student debt is upheld, just out of college adults are not buying houses & cars, they're a literal non-factor in the economy on that scale, so their debt is not going to crash the economy.
• 'Stocks are down 1.5% this year'. OMG, no. Let's ignore that they were up 19.4% last year (S&P 500).

[Drew Dowdell]

8 hours ago, balthazar said:

RE the NYT piece, some counterpoints to consider:
• If/when the 'Blue Wave' hits; a number of it's players have floated forgiving all student debt, so that could disappear with a signature. Unfortunately, that bubble will just pop up somewhere else. But even if student debt is upheld, just out of college adults are not buying houses & cars, they're a literal non-factor in the economy on that scale, so their debt is not going to crash the economy.
• 'Stocks are down 1.5% this year'. OMG, no. Let's ignore that they were up 19.4% last year (S&P 500).

1

It's not anywhere near that simple since much student debt is privately held. 

The real threat is corporate debt. 9 trillion of it.  Companies that are cash-flowing today could become black holes of bankruptcy in just a few months time. 

The US auto manufacturers, for once, are ahead of the game.  FCA paid off most of its debt, GM is going through their major restructuring to lower costs. Ford is doing the same.  If/when a global recession hits in the near term, the auto manufacturers do not want to need to be bailed out again.