You’ve got to have some sympathy for Toyota. They finally injected some passion into the Corolla, Camry, and Avalon at exactly the time when people are jumping ship to crossovers. To be fair, Toyota will still probably still sell over 600,000 of the Corolla and Camry for years to come. But it is a bit ironic. Those cars really aren’t the problem. It’s pretty much everything else that is cause for concern. Lexus probably needs to kill off its sedans. And Toyota needs to rationalize its crossover lineup and update its body-on-frame utility vehicles.
The Rav4 is fine though. And there is one area where Toyota is kicking ass: hybrids.
It was not a great year for any Toyota car not named Corolla or Camry. Both cars held their ground in a rapidly declining market. Literally everything else that’s been on sale longer than a year experienced a double digit decline. That includes the artist formerly known as Scion iA, the Yaris. Sales barely crested the 20,000 mark. The slightly rebadged Mazda 2 isn’t a big risk for the company, so it will probably stick around for a while. Ironically, Mazda might not make the most exciting Yaris for much longer. International markets will receive a home grown Yaris based on Toyota’s TNGA platform. It will even offer all-wheel drive. And there’s a crazy performance variant too. Once again, desirable small cars become forbidden fruit for Americans. Same as it ever was.
The other declines aren’t terribly surprising. The 86 sells so slowly its successor might wear a different name. The Avalon doesn’t really make a case for itself given the overall excellence of the Camry. And customers are justifiably shunning the Prius for hybrids that don’t look like something out of a Japanese anime. Supra aside, the only interesting Toyota cars worth watching this year are the Camry and Avalon. The addition of all-wheel drive could conceivably keep customers in the fold.
Toyota’s utility lineup is in need of improvement. Or is it? The Rav4 is still king of the crossovers, posting a notable 5% increase in sales. That’s a solid victory to score in such a cutthroat segment. Last year, the compact segment outsold compact and mid-size cars combined. Toyota deserves a tip of the hat for successfully redesigning their crown jewel. How hard should Toyota sweat the decline of pretty much everything else? Hard to say. But here’s something to think about: Toyota’s utility lineup only sold about 50,000 more units than the Rav4 last year. Plus, the declines aren’t too bad. The real issue is the CH-R and missing mid-size crossover. Toyota’s subcompact crossover is one of the slowest selling models in the segment. It received middling reviews when it debuted and it doesn’t even offer all-wheel drive. The company can and should do better. Additionally, the lack of a Venza replacement is disappointing. Customers are clearly buying mid-size crossovers. Chevy sold almost 60,000 Blazers last year. Toyota is poised to miss out on a potentially profitable segment.
Toyota’s body-on-frame vehicles could definitely use updates, although the Tacoma still resonates with a lot of buyers. All of these models have likely been paid for at this point, so the losses probably aren’t serious as the sales numbers might suggest. Everyone should be jealous at the person who snagged what might be the last new FJ Cruiser in America. Used examples are red hot right now, so they could probably flip the thing and make a substantial profit, provided the dealer sold it to them at a reasonable price.
Lexus definitely has too many cars. Aside from the ES, no other high volume model justified its existence in 2019. It’s hard to say what the brand could be doing differently here given the state passenger cars. It seems BMW and Mercedes are the brands where shoppers go when they want a smaller luxury sedan that’s gasoline powered.
UX FTW? The subcompact luxury crossover helped Lexus stem the bleeding from the drop in sedan sales. The NX and RX didn’t light the charts on fire, but their segments are getting more competitive by the day, so their minor losses are understandable. Lexus could probably use a decent three row SUV. Otherwise, there’s not much to say about these products.
If you want to know why Honda, Ford, and the Koreans are still investing in hybrids, look no further than this chart. Car shoppers are clearly interested in partially electric vehicles. Just look at the 93% increase of the Rav4 hybrid! Even the Highlander hybrid posted a substantial gain, despite its age. That bodes extremely well for the new model, which gets 34mpg combined. It seems the key to creating desirable hybrids is stellar fuel economy, an attractive exterior, and standard or optional all-wheel drive.
It’s hard to say if Toyota needs to be doing anything differently. The company is still doing pretty well when it comes to passenger cars and crossovers, but there are some blind spots. The C-HR is mediocre product in a growing segment. And the lack of a mid-size crossover is a surprising oversight. But their hybrid push is bearing substantial fruit and Lexus crossovers are probably doing about as well as can be expected given the competition. Average transaction prices were up 2.3% last year too. What Toyota really needs is a new body-on-frame platform. But they’re almost certainly working on that right now. Staying the course is a prudent course of action.
As the price differential shrinks between hybrid and non-hybrid versions of a given vehicle, the reasons NOT to buy a hybrid are disappearing.
When the G2 Prius came out in 2004, it cost ~$5k more than an equivalent Corolla, and that $5k paid for a lot of gas. Only folks who drove a LOT of miles annually were benefiting.
Today, the price differential between a RAV4 LE AWD and a RAV4 LE AWD Hybrid is a mere $850. There’s almost no reason NOT to buy the Hybrid version.
It depends on how much better the fuel mileage is of the hybrid version versus the non-hybrid. Still, even a negligble increase can be tempting when the price of admission is that low. In fact, at only $850 less than the hybrid, it’s puzzling why Toyota even offers a RAV4 LE AWD non-hybrid.
When the original Malibu hybrid arrived, it, too, didn’t cost much more than the non-hybrid, but the fuel mileage wasn’t much better, either. Soon enough, GM saw their ‘error’ and quickly jacked up the price of the hybrid, and, accordingly, watched hybrid sales nosedive. The model didn’t last too much longer after that.
A more recent example is the Subaru Crosstrek. The original hybrid version didn’t offer much of an increase in fuel mileage, but sure cost a lot more. IIRC, sales were so slow, Subaru cancelled the hybrid, did a bit of retooling, and brought it back with a lower premium and better fuel mileage. AFAIK, sales of the revamped Crosstrek hybrid have similarly improved.
Clearly, hybrid manufacturers have to carefully adjust pricing with increases in fuel mileage. Hybrid shoppers aren’t quite as stupid as car companies might think.
I don’t pay much attention to Toyota, much less Lexus, but there is a 3 row RX in other markets, is it not being sold in North American dealerships?
From what I read and view in videos, Lexus CARS make a better case for themselves as used cars. Certainly better than some (most?) comparable German sedans.
BTW, I seem to remember that the original generation of the RAV4 hybrid was MORE than a $1,000 higher than a comparable non-hybrid…though Toyota upped the features in the hybrid to justify the price difference.
Yes, there is a three row RX available in America, but it is so small it isn’t really competitive with something like the Acura RDX, Cadillac XT6, or Lincoln Aviator.
Toyota’s biggest concern with the RAV4 Hybrid is increasing production to meet demand.
The C-HR is an overstyled, underglazed mess, to the point that Toyota might actually have sold more Corolla wagons. The Kia Soul sells well, even up north, without an AWD option because it’s a package that works; the C-HR smacks of a design that tried too hard to be “innovative” above all else. Would Toyota have been better off revisiting the xB1 and dressing it in outdoor gear? Almost certainly.
Corolla sales are perplexing; last year they were in a sort of design-cycle butter zone with the new hatchback for the sort of car guys who like compacts – I read something elsewhere about a 30% manual take rate(!) – and the outgoing old sedan piled high and selling cheap to the whitegoods market. Still, the new sedan should be doing better. Maybe there’s another case where more hybrid supply would mean more sales?
Paul, you mention several times the lack of a midsize CUV. Where does that fit relative to RAV4 and Highlander? I once considered those to be compact and mid-size respectively, but they’ve grown substantially and category definitions change. Is something needed between them?
The mid-size would fit right between the Rav4 and Highlander, just like the Ford Edge sits right between the Escape and the Explorer.
The 4Runner sort of captures that spot if one looks at exterior length. Inside the 4Runner is tighter than the Highlander as well and while a third row is in fact offered (or was the last time I looked) it’s quite vestigial and not really for regular use.
Sure it’s BOF SUV vs CUV but the moms at in the school pickup line don’t seem to care/notice.
I have to wonder why they don’t just make all their product hybrid, if only to lower the per unit cost to build a hybrid, and adjust the MSRP up a bit to compensate? I don’t think anyone at this point is opposed to driving a hybrid, other than paying a cost penalty over an identical model without the hybrid drive.
IIRC, the Japanese were the ones to make formerly option-only items standard, with AM/FM radios coming to mind. The idea was that by purchasing in bulk, and only installing one common one in all cars, it ended up cheaper to produce than offering a base model and several more expensive options.
Toyota could do this easily, and with their reluctance to switch to full EV, it could be a game changer for them and the rest of the conventional OEMs.
Toyota sells enough units that it needs lowball product for advertising and to compete with Korean sedans. The non hybrid model establishes a premium for hybrid drive.
Going across the board with n expensive feature might work for a specialty brand like Subaru, but Toyota has a much broader market.
Several likely insignificant comments, likely not worthy of CC, and I expect to be told so.
Firstly, the old school, truly excellent but pricey, body on frame Land Cruiser 200 had an almost 10% bump up in sales. Hmmm. Possibly returning LC fans, or even disenchanted, style challenged Lexus LX570 potential buyers, buying in anticipation of the rumored discontinuation in the USA. Hmmm, again. A strange new world, here in the New World, perhaps
Secondly: A daughter recently purchased a new, latest generation RAV4 Limited Hybrid that I have had opportunity to drive resulting in an unsurprising conclusion: what a delightful, refined vehicle, and given the minor price differential from the non-hybrid versions, a definite-no-brainer purchase choice. Bravo.
Thirdly: Additionally, regarding the Lexus lineup, the newly revised excellent RX series, especially the revised 2020 RX450h hybrids which I have also driven, were introduced late in calendar year 2019 having no effect on late year sales. Like the RAV4, the reduced pricing differential for the RX hybrids compared to the non-hybrid versions will likely result in increased RX hybrid sales in 2020. The long overdue infotainment system upgrade also definitely helps the RX revision. Incidentally,the RX line is the heavy hitter for Lexus sales volume in the USA.
Fourthly: A thought likely to be controversial here in CCland is that the developmental funds spent by GM for its new C8 Corvette (a future DS?) had better been directed to a line of money making, revenue generating hybrids to be competitive with Toyota. Just saying….only an opinion. The sports car market segment appears to be in a terminal phase of contraction, just ask Porsche about the revenues from SUV’s vs sports cars. A lesson here?
Porsche sells lots of SUVs, at a premium, because they have Porsche sports car badges.
Volkswagen’s Phaeton and Touareg experiences told them all they ever need to know about selling an expensive product with an economy car badge. Porsche, Lamborghini, and Bentley wouldn’t sell SUV s in volume without the image from their lux sedans, sports cars, and racing kudos. They’d be trim packages on Audis, at best.
The Lexus SUV/CUV lines have long been the main sales driver at Lexus with the exception of the ES sedan, with, as GeelongVic stated above, the RX being the mainstay.
Looking at it merely in percentage terms a 12% drop in total sedan sales seems at first like a huge issue when paired with “only” a 5% gain in truck sales. But look at the numbers and they actually pretty much exactly cancel each other (-12k, +12k) out with Lexus’ ratio of truck to car sales being more than 2:1. I’d guess that every increased RX or whatever sale delivers quite a bit more profit than every lost sedan sale.
Almost 300k in Lexus brand sales is quite good, and of course many of those models are also sold other places in the world, more than doubling that volume.
New Tacoma and Tundra are in the pipeline.
I wonder how many of those Camry and Corolla sales are fleet purchases? Reason I ask is because(I travel frequently) I notice a lot of them in the rental car facilities. Whereas you used to see lots of GM’s and Fords I see a sh!t-ton of Camrys, Corollas and by far, all Nissan products(which kinda suck). Heck, I never thought I’d see Volksys like Jettas and Passats in numbers in rental fleets in numbers, but here they are….it’s a strange new world out there.