New entrants to the Avanza compact MPV segment have hit Toyota hard

New entrants to the Avanza compact MPV segment have hit Toyota hard

Toyota's dominance of the ASEAN vehicle market has come under significant pressure this year despite brands such as Chevrolet and Ford having significantly downsized their product ranges and activities in the region in the last few years.

Toyota is at the apex of a regional market and industry dominated by Japanese brands. But its regional sales fell by close to 14% to roughly 207,000 units in the first-quarter from 240,000 units in the same period of 2017, based on data from the five largest markets in the trade bloc, while overall vehicles sales in the region were up by 2.3% at 798,000 units from 780,000 units.

The Toyota brand still commands a highly enviable 26% share of regional sales, not including other brands in the group such as Daihatsu, Lexus and Hino, but this was down from almost 31% in the first quarter of 2017.

Smaller brands have successfully challenged Toyota in its key large-volume segments, starting with Honda some 5-6 years ago and now Mitsubishi in Indonesia's MPV segment, while several brands over the last few years have been gaining ground in the pickup truck (and derivatives) segment across the region.

The biggest loss of market share in the first quarter was in the region's largest vehicle market, Indonesia, where Toyota sales fell by over 21% to 84,000 units from 107,000 units a year earlier. Much of this loss can be attributed to falling demand for the Avanza compact MPV, with sales plunging by 40% to 21,000 units from 36,000 a year earlier.

Toyota was responsible for establishing this segment in Indonesia in 2004, with a Daihatsu-based model produced at Astra Daihatsu Motor's plant in Sunter, North Jakarta. Over the following 13 years, the company strengthened its dominance of the Indonesia thanks in large part to this model.

At the market's peak in 2013, a total of 213,000 Avanzas and a further 65,000 units sold under the Daihatsu Xenia badge were sold in Indonesia – equivalent to almost 23% of total vehicle sales in the country. A further 38,000 Avanzas were exported that year, making it a hugely important model for Toyota with annual output of around 316,000 units that year.

The model is also produced in Malaysia by Perodua and for a while also in China.

The arrival of the Mitsubishi Xpanderlast July has put a massive dent in Toyota's sales. Honda, too, has seen its market share plunge in this market this year, to 12.4% in the first quarter from 18.6% in the same period of last year.

With its attractive bold design, high quality interior and competitive price, the Xpander has taken the Indonesian market by storm. Itoutsold the Avanza in the first quarter of 2018, albeit by a slim but growing margin, with a total of 22,000 sales compared with the Avanza's 21,000 units.

While Toyota disappointed the market here with just minor visible changes in the last update of the Avanza in 2016, Mitsubishi stole the initiative by raising standards in this segment in terms of quality and design.

Exports of the Xpander began this month and are expected to reach 30,000 units this year, on top of an expected 90,000 domestic sales.

Toyota is understood to have brought forward a model change-over for the Avanzainto next year. A much more comprehensive body and interior redesign is expected this time as the pressure increases to regain the initiative in this segment from Mitsubishi.

In the meantime, Toyota hopes the recent launch of the new Rush compact SUV, based on the Daihatsu Terios, and the launch of the larger C-HR SUV this month will help it claw back some lost ground.

Toyota has also lost market share in all other markets in the ASEAN so far this year, albeit not to the same extent, and this may reflectsome degree some level of brand fatigue as well as stronger competition from its rival brands.

The likes of Ford, Mitsubishi and even Chevrolet and Mazda have targeted the pickup truck segment more actively in the last two years and have made significant gains in key markets in the region.

In Thailand, the region's second-largest market, Toyota's market share dropped to 27% in the first quarter from 28% previously, with its sales rising by just 8.5% to 64,000 units while the overall market expanded by almost 13% to 237,061 units.

This reflects Toyota's underperformance in the all-important pickup truck sector, with Ford, Mitsubishi, Nissan and Chevrolet all reporting much stronger gains.

In the Philippines, Toyota's market share declinedto just over 38% in the first quarter from close to 44% a year earlier. Sales fell by almost 21% to 34,000 units, while the overall market declined by just over 9% to an estimated 89,000 units.

The brand lost ground mainly due to sharply weaker sales of the Vios and Corolla passenger cars and Innova and Avanza MPVs and the Hiace minibus, which was offset only in part by stronger demand for the Agya small car and the Hilux model.The arrival this month of the Mitsubishi Xpander in this market is expected to put additional pressure on Toyota's market share here.

In Malaysia Toyota's market share dropped from over 13% to just under 11% in the first quarter, as sales of both passenger cars and commercial vehicles fell sharply. In Vietnamits market share fell from 23% to 20%, with sales of its Hilux model sharply lower, although here the market was distorted by new import regulations.

Toyota sales and market share in ASEAN

'000s201620171-3 20171-3 2018% ch 2018/17
Toyota Indonesia38237110784-21.5
Toyota Thailand24524059648.5
Toyota Philippines1581834334-20.9
Toyota Malaysia64691713-23.5
Toyota Vietnam57591412-14.3
Toyota ASEAN906922240207-13.9
Toyota ASEAN share29.228.330.825.9-15.9
Total ASEAN310632537807982.3


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