Referred to within industry marketing departments as the ‘reverse tsunami’, the phrase has been used to describe a flood of new vehicles purportedly on boats on their way from Japan to Australia.
But Toyota Australia’s Mike Breen said the country’s number one new car brand has no plans to flood the market simply to inflate its 2011 sales figures.
“There will not be an over supply of vehicles,” he said. “Lost production can never be recovered. The factories can only work to a certain capacity, they can't work beyond capacity.”
An oversupply of new vehicles in showrooms can lead to downward pressure on prices, which in turn can hurt overall profitability for the manufacturer - a phenomenon referred to within the industry as 'death by oversupply'.
An oversupply situation is generally great news for consumers and not so great for dealers. If Mr Breen's claims are accurate, it appears dealers will be breathing a sigh of relief, and new car shoppers will still be forced to don their haggling hats.
The earthquake and tsunami disaster that struck Japan on March 11 affected Toyota more than any other manufacturer. Production plants in Japan and abroad were closed and were forced to operate at reduced levels as the supply from parts manufacturers was also hit hard.
Toyota Australia’s Altona plant – which manufactures Camry, Hybrid Camry and Aurion models for the local market and for export – operated at 50 per cent capacity for a month between May and June because of disaster-induced parts shortages.
Mr Breen said Toyota Australia recovered to normal import volumes from Japan in July. Those vehicles were delivered during August, and official VFACTS data to be released on Monday should shed more light on Toyota’s local sales recovery.
Despite this, Mr Breen said many of these vehicles satisfied only outstanding orders, which dated back to March in some cases.
“Some FJ Cruiser orders received in March are still outstanding and won't be filled until September,” he said. “So whilst production is beginning to ramp up, stock coming in will, in some cases, just fulfil outstanding orders.”
Mr Breen said although Toyota Australia was planning promotional sales campaigns over the coming months, they would be used “primarily to stimulate interest in the market”.
Toyota Australia sold 98,108 new vehicles between January and July 2011 – 21.3 per cent (or 26,612 units) off the pace compared with the same seven-month period in 2010, when the Big T sold 124,720 vehicles.
For the whole of 2010, Toyota Australia sold 214,718 passenger cars, SUVs and commercial vehicles, and at this stage it expects 2011 will finish around 20,000-25,000 behind its initial projections.
On a global scale, the reduced production has seen Toyota slip to third position in total sales behind General Motors and Volkswagen. Last month, we reported GM led the way in the first half of 2011 with 4.53 million vehicle sales, followed by Volkswagen (4.13 million) and then Toyota (3.71 million).
Vehicle production at Toyota City in Japan was down 23 per cent in the first half of 2011, compared with the same period in 2010.
With parts supply now largely back to normal, it appears some Toyota factories actually can exceed 100 per cent of production capacity. Toyota North America head of manufacturing operations, Ray Tanguay, said last month that the brand’s North American plants would run at 110 per cent of capacity during September.
Toyota Australia’s production facility in Altona is today running 110 per cent behind the output (in per cent) of those of its North American counterparts. Its 3300+ workers are on strike over pay increases. When the 24-hour industrial action ends tomorrow morning, the plant will resume building cars for domestic and export markets at a rate of 559 per day.