Toyota always aimed to be number one, and soon the car maker will be the only one

Almost 50 years ago Toyota bought the land in Altona, west of Melbourne, it now uses to produce more than 100,000 cars annually. Yet the Japanese car maker didn't open a manufacturing facility there until 1978, instead relying on a partnership with Australian Motor Industries to assemble vehicles in Port Melbourne.
By · 14 Dec 2013
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14 Dec 2013
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Almost 50 years ago Toyota bought the land in Altona, west of Melbourne, it now uses to produce more than 100,000 cars annually. Yet the Japanese car maker didn't open a manufacturing facility there until 1978, instead relying on a partnership with Australian Motor Industries to assemble vehicles in Port Melbourne.

But it was back in the 1960s that Toyota first had its vision of becoming the biggest player in the Australian automotive industry. It's that foresight, according to former local chief John Conomos - the man who ran the company for three decades - that is paying off and will see Toyota as the last man standing in an industry on the shrink.

"It's simple - vision and planning," Conomos says.

"They wanted to become the number one supplier all those years ago. They knew one day they would be building their own cars [in Australia]."

But it hasn't always been an easy ride. As Conomos puts it, the brand had a "very insignificant" presence and a "disparate" network of distributors in the 1970s and early 1980s.

Under Conomos, Toyota consolidated its local operations and began working on the vision to beat the dominant duo, Ford and Holden.

"We started seriously in the 1990s, which we called the decade of dominance," Conomos says, pointing to the huge lead Ford had on the rest of the market.

Toyota's goal was simple: be number one.

"The plan was to identify every segment [Toyota wanted to play in] then dominate every segment."

It was backed up by clever and relentless advertising, which more recently has included deals with sports such as cricket and AFL.

The strategy worked, with the brand challenging traditional market leaders Ford and Holden for the number one position throughout the 1990s, eventually grabbing it temporarily late in the decade. While it was building cars locally it was importing models that were accounting for most of the growth.

At the same time there was a Monaro-infused high at Holden, which in 2002 saw its market share peak at 21.6 per cent. But there was arrogance within at the quintessentially Australian brand that could seemingly do no wrong, with profitable and growing export markets and the public's attention thanks to a broadening locally produced model range that included dual-cab utes, an SUV and a steady stream of headline-grabbing concept cars, many of which were more about celebrating history rather than forging a path into the future.

Its success and the talent that flowed from the local design and engineering teams through the broader General Motors world were enough for the American parent to leave it to fight its own battles and, to a large extent, work independently of head office.

Toyota, on the other hand, was sticking to its vision. Its motto has been, "think like number one, act like number two".

It shrugged off taunts of producing cars more akin to whitegoods and developing a bland image when Australians loved the roar of GTs and Monaros or the cheekiness of a Sandman.

In 2003 Toyota reclaimed the top spot and has not lost it since.

But the one four-wheeled nut Toyota has never cracked is the large car segment, the traditional Australian family car market and the one that for decades resonated with so many Australians - before they decided SUVs were a better bet.

In 2003 the large car market peaked at 203,524 sales, making it the biggest segment, accounting for 22 per cent of the overall market. Holden owned 43 per cent of that segment while Toyota's Avalon could manage just 3 per cent.

Little wonder Holden and Ford diverted so much of their attention into capitalising on that large car segment, unaware the market was about to collapse (in 2012 just 63,096 large cars were sold, representing just 5.7 per cent of a record market).

Still, Toyota was desperate for the Avalon to succeed, but the public didn't like its bland styling and the fact it was based on an older US design.

It simply wasn't seen as an Australian car, even if it was produced in Melbourne. That it had a smaller V6 engine didn't help in a segment where bigger was still better.

Toyota tried everything to get punters to warm to the Avalon, even employing Barry Humpries' alter egos, Sir Les Patterson and Dame Edna. But if anything the campaign cheapened the car at a time Holden had Deborah Hutton selling its wares. Toyota also admitted at the time it didn't know enough about the large car market.

In the end the blandness and international flavour has turned out to be integral to Toyota's success. Taking a global vehicle means minimal design and engineering resources (as an example Holden committed $1 billion to its VE Commodore that went on sale in 2006) and makes the car more saleable around the world.

It also makes it easier to adapt to new trends or demands.

While Holden and Ford were locked into six cylinders and V8s, Toyota was more committed to four cylinders, even introducing a fleet-friendly Camry Hybrid in 2010.

That global model is one Ford and GM are working towards; the next generation Commodore was being primarily designed overseas, not in Australia, and it would have been a global vehicle, in the same way as the Camry.

All the while Toyota was focusing on its export business, something Conomos says was key to its position as the largest Australian car maker. Last year 73 per cent of the 101,424 vehicles Toyota produced in Australia were sent offshore.

"The Australian market was too small ... and Toyota realised that early on," Conomos says. "They saw exports as necessary and we achieved that."

Camrys forged into the Middle Eastern markets, where they're still sold today. Holden also sent cars to the Middle East, but the company didn't have the persistence - or willingness to weather a rising Australian dollar.

Whether Toyota decides to follow Ford and Holden in announcing its retreat from Australia is not yet known and likely won't be for months. Due to the model cycle of its existing locally produced cars - the Camry and Aurion - Toyota has the luxury of time, up to six months.

At least one international analyst is convinced Toyota is here to stay, saying its export focus and a lower reliance on government assistance will ensure it has the politicians onside, unlike Holden.

Conomos also points to a fierce loyalty from the Tokyo-based parent company. Australia was the first country in which Toyota produced vehicles outside Japan and the market is still an important one for a brand fighting to be the top seller in a global economy.

"They will stay here as long as they're welcome," Conomos says.
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