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Toyota comeback is far ahead of schedule

Bapun Raz

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LOS ANGELES -- Toyota says supplies of most vehicles will begin rebounding in July, four months earlier than expected.

But models built in Japan, such as most Lexuses and the Toyota Prius, are notable exceptions.

Toyota had planned to start bringing dealer inventory back to normal in the fourth quarter. But North American parts supply and manufacturing are ramping up from the March earthquake in Japan much faster than anticipated.

Full production of most Lexuses and the Prius is still scheduled for November, but the faster-than-expected overall recovery is good news for Toyota dealers with depleted lots.

In Japan, some supplier parts have been resourced, although the focus is on restoring production at existing suppliers. For instance, some furloughed Toyota assembly plant workers in Japan were given the option to help supplier plants get back online.

The resumption of full-scale parts deliveries is allowing a return to full production this month of eight core North America-built Toyota models: the Avalon, Camry, Corolla, Highlander, Matrix, Sequoia, Sienna and Venza.

"The wholesale flow rates that weren't expected until October or November are happening right now," said Randy Pflughaupt, Toyota Motor Sales U.S.A. group vice president of sales administration. "We are looking much better than a few weeks ago."

Factory orders to dealers will be 30 percent better in June than in May, and July orders will be more than double the May level, Pflughaupt said.

"We've hit that low point, and now it's in the rearview mirror," he said.

After the quake, Toyota's North American factories were running at 30 percent and have been increasing slowly since then.

Last week's announcement of full North American production of the RAV4, Tacoma, Tundra and Lexus RX 350 in September will also help Toyota dealers get back in the game ahead of schedule.

And when assembly lines reach full capacity, Toyota likely will schedule overtime and weekend work to refill dealer inventories, executives said.

Now, though, Toyota dealers are struggling with shortages. Inventories of three crucial cars -- the Camry, Corolla and Prius -- are down sharply, although only the Prius is in single-digit days supply.

As of last week, the Toyota brand had about 150,000 units on the ground in the United States, either in transit to dealers or on dealer lots, Pflughaupt said. That's down from 185,400 units as of June 1. A year ago Toyota had 280,500 Toyota-Scion units for a 52-day supply.

Toyota-Scion's days supply in the United States on June 1 was 46 days, according to the Automotive News Data Center. Lexus was at 26 days.

"In relative terms, everything is low. When we went into the quake we were gaining market speed, so the RAV4, Sienna, Camry and Corolla were already low. Now everything is proportionately lower," Pflughaupt said.

The biggest problem is with vehicles built in Japan, such as the Prius, Yaris, FJ Cruiser, 4Runner and most of the Lexus lineup. Still, Toyota's U.S. executives say they're stunned by the rapid recovery of the manufacturing base in Japan.

The recent production announcements have Bob Carter, Toyota Division general manager, saying Toyota is "back in the sales business."

"There's a perception that there's no cars around, but we have good supply and got the pipeline going, so we are shifting focus to marketing. We have deals, and dealers have the vehicles," Carter said.

Starting this week through August, Toyota will resume a version of its "No. 1 for a Reason" marketing campaign promoting national and regional incentives, Carter said.

Toyota also has quietly started an incentive for customers with expiring leases. If they can't get the replacement vehicle they want, Toyota will extend the existing lease for six months and offer a $750 coupon for use when the customer turns in the vehicle for a new one.

There will not be a preference for any specific build combination or destination country as Japan production ramps up, Pflughaupt said. Because Toyota already had orders for specific vehicles in place on March 11 for the rest of the build year, production will resume as originally scheduled.

That may sting Lexus dealers, because about half of their sales volume comes from products made in Japan. The volume-leader RX 350 crossover is made in Canada, but the rest of the lineup is imported.

"Those [Lexus] guys have been impacted the most of anybody," Pflughaupt said. "But I expect the news for Lexus will get much better much faster."

The rapid recovery is allowing Toyota to resume contact with fleet customers.

Six weeks ago, Toyota told fleet clients that future orders were on indefinite hold. But the automaker is again talking with fleets about 2012-model deliveries, especially getting the redesigned Camry into circulation. But Pflughaupt said retail deliveries come first.



Read more: http://www.autonews.com/apps/pbcs.dll/article?AID=/20110620/OEM01/306209963/1117#ixzz1PpjTPoO1
 
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