Toyota Puts Profits Over Volume – And Boosts Truck Resale Values In the Process
Tim Esterdahl | Jan 20, 2014 | Comments 10
In a recent interview, a Toyota exec revealed that demand for Toyota trucks exceeds production by 30k trucks a year. However, rather than expand the San Antonio truck plant to build more units, Toyota is sticking with what they have.
A Toyota Exec recently said that plans to expand the San Antonio plant are on hold.
If it’s really true that Toyota could sell another 30k trucks a year with more capacity, it means that there are about 11 or 12 people willing to buy 10 new Toyota trucks. While most of them will get the truck they want, 1 or 2 will have to look elsewhere and that’s great news for used Tundra and Tacoma owners. Those owners will continue to see high resale value for their trucks.
During the Autonews.com interview, Toyota sales and manufacturing executive Randy Pflughaupt also said that Toyota still has the recession on their mind.
“We have some optimism about the North American market,” said Toyota sales and manufacturing executive Randy Pflughaupt said in an interview at the Detroit auto show last week to Autonews.com. “But we learned from the recent recession. We need to approach big jumps with caution.”
It is important to note that Pflughaupt is also the senior vice president for production control as well. He said that a “key point of Toyota’s midterm strategic plan through 2025 is to determine whether to expand the San Antonio plant.”
With high demand, you would probably think Toyota should just expand production already. Yet, the idea of adding another assembly line is a much larger proposition than you would think. The San Antonio plant is already one of Toyota’s fastest moving production lines and it pushes out 200,000 units with both Saturday and overtime shifts. In order to add more capacity, Toyota would literally have to blow out another wall and add on to their factory. This could increase capacity by another 100k units, but it would cost millions.
The truth is that demand is right around another 30k units according to Jim Lentz, presdient of Toyota’s North American region. Taking a big gamble and increasing capacity that has lots of risk. Lentz told Autonews; “None of us has the stomach to add another 100k.”
The flip side to this story is the question as to whether or not Toyota really does plan to do anything new with their truck. Most Toyota Tundra fans want new power train options and trim offerings (like a true Rock Warrior with locking differential). Yet, if Toyota can’t build the current base truck fast enough to keep up with demand, how likely would they add new options.
This news isn’t anything different from what we have been hearing and reporting on for a while. Yet, the more these stories come out, the more it leads us to believe that a diesel or HD Tundra is dead. Toyota simply doesn’t have the capacity to build more and they seem really skittish to put more resources into the full-size truck market.
What do you think? What conclusion do you draw from the story?
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Filed Under: Auto News
Supply and demand. Eventually those two who got left out will get their new truck. It will just take some time. If I have to order what I want then so be it. At least I will get what I like in my truck and not have to settle.
As of right now, the 2014 tundra is in short supply where I live. Why I have no clue really I would think more would be on the lots by now, or not? Am I wrong?
With such a short supply, rebates will never go over 1500 bucks and therefore I won’t be buying anytime soon. Plus, dealers around me are not shelling out on used 2010 thru 2012 tundras top trade in value anymore making it a lose/lose for potential customers and a win/win for dealers in the driver’s seat. For example, I got 26K trade in on my 2010 identical DC tundra for my new 2012 tundra identical almost as well and purchase price went up 2 grand in 2 years yet still 26K trade in now for my 2012 – doesn’t add up to me.
Well, it bodes well for me when I need to sell my lease.
-Tim
You mentioned about another Rock Warrior, well I was watching AMA supercross on Sat. night and Toyota is coming out with a TRD Pro p/u. Looks very similar to the ford raptor. I thought wow!! You guys gotta watch more motocross.
ToyotaDave,
Apparently we do need to watch more motocross, maybe I can convince my wife!
Did you get another other details/pics?? Or links to some site?
-Tim
I have talked about the expansion of the San Antonio plant the last couple of months. From a sales volume stand point with just a modest expansion of the half ton offerings and very minor tweaking, they would need to double or triple the size of the plant.
Toyota is very wise, they are not stupid. They know full well that the market in North American is strictly politically controlled. So they have to play the game within the confines of our political structure. In doing that, they have a keen eye on profitability via producing a product – trucks in this case. That is simply not the case with the other three truck makers.
Toyota is not like Government Motors with a 5 to 6 month supply of Silverado’s on the lot; they cannot turn to the Fed and have them print more money to cover their losses. Toyota is “not” in the business of sending money to the EU (Peugeot). Toyota is not an Italian owned company governed by Emperor Merkel (she always gets what she wants and it comes from the American taxpayers). Toyota is not like Ford riding the skirt tails of the other “so called” American companies; they can easily get away with building products that simply do not work. Toyota is here to make a profit. In order to do that, the merits of the product are the “only” thing (combined with Dealer service) they have going for them.
I think Toyota’s current position is exceptionally wise. They do not want to do anything thing that would jeopardize their gains to date. Of course if this was the 1980’s, then Toyota would “own” the half ton market in less than a year, the problem is, it’s not the 1980’s – we no longer have a free business climate.
With todays’ environment, does anyone possibly think that the “powers that be” inside the beltway would “allow” Toyota to “own” the half ton market? Or even have a remote indication they are headed that way? If you believe in the Wizard of Oz and you are yelling for Yellen, then there is nothing I can do to change your mind.
http://www.ispot.tv/ad/7TLl/to.....as-station
A very well written comment Randy. I commend you for your insight and overall knowledge of the auto industry as a whole. It’s comments such as yours, Randy, that keeps me coming back for more. You definitely get it. Toyota is the best bang and value for your buck. It also helps our country to prosper from within. Just my two cents, thank you Tundra Headquarters as always.
It’s one of the processes in the so-called “The Toyota Way.” Eliminate over production and excessive inventory.
I guess will see come spring what supply is on dealers’ lots. As of now 2014’s are scarce if you want a specific model with exact color interior and exterior. I don’t expect 4-5K in rebates anymore until gas goes above 4 bucks per gallon, but 2 grand would be a lot more tempting vs. only 500 piddly bucks on a 38K msrp truck. Heck, the RAV4 and other cheaper models all have the same 500 dollar rebates and is 10-15K cheaper to purchase.
With limited supply/production, it gives all the cards to the dealers and a big zilch to the potential customer.