Toyota says it launched its sales operation in Mexico this year two years ahead of schedule thanks to an unlikely deal with a Mexican maker of beach buggies whose managing director also markets Ferraris, Maseratis and Alfa Romeos writes Stephen Downer.
By Mexican law, only companies that produce cars or trucks in Mexico for export may import vehicles. For every vehicle exported, they are allowed to import one.
Toyota’s first assembly plant in Mexico, being built in Tijuana at a cost of US$140 million, will assemble 20,000 Tacoma trucks and 170,000 truck boxes per year. But it will not come on stream until 2004.
Toyota Motor Sales de México (TMS Mexico) is a subsidiary of TMS USA, Inc. As a US-based company, TMS could have exported vehicles from the US into Mexico under the terms of the North American Free Trade Agreement, but not until January 2004.
Either way, it appeared as though Toyota would have to wait.
The company sidestepped the regulations; however, by using beach buggy maker Autos Especiales’ import licence and the accumulated export credits of two Toyota component-producing affiliates, Denso Mexicana and Aisin Mexicana.
“The agreement with Autos Especiales was very important for us,” said José Luis Sánchez Andión, managing director of TMS Mexico, in an interview with just-auto.com. “We were able to initiate our business two years earlier than would have been the case.”
Since the spring of this year Toyota has marketed the Camry and Corolla at six sales outlets in Mexico. It has just introduced to the Mexican market the Matrix, a so-called crossover utility vehicle built on a Corolla platform, and the 4Runner mid-sized SUV.
Autos Especiales, or AESA, as it is popularly known, is run by Martin Josephi, one of the Mexican automotive industry’s most experienced executives.
For seven years he was managing director of Volkswagen de México, leaving in 1993 and forming AESA in the city of Puebla in 1995. Apart from exporting buggies, the company has also produced VW convertibles and shipped about 1,500 of them to Europe. European legislation governing emission and noise level standards halted the trade in 1999.
Josephi, who imports Ferraris, Maseratis and Alfa Romeos through another company, Scuderia Italia, has always insisted nothing out of the ordinary was behind the deal with Toyota.
“When Mercedes-Benz and Chrysler formed their joint venture, Mercedes stopped assembling cars in Mexico and started importing them through Chrysler”, which has an important assembly operation in Mexico, he said in one interview.
“And when Renault returned to Mexico, it did so through its alliance partner Nissan.”
Sánchez Andión is himself an automotive industry veteran, having worked with International trucks in Mexico and with Chrysler’s Agromotores y Camiones company. He has also been an independent consultant for the industry.
According to Sánchez Andión, TMS’s initial investment in Mexico is US$60 million, money which has been spent on establishing systems and processes, on acquiring corporate offices in Mexico City and building new dealerships.
“The Mexican government opened its doors to us,” he said, adding that “the (Toyota) people in Japan and Los Angeles are surprised and pleased with the development of this project and the speed at which we have launched the company.”
Sánchez Andión said that in December Toyota would announce the names of nine new dealership franchises in Mexico.
Asked about Toyota’s growth projections in Mexico, he emphasised TMS’s status as a sales company before responding that “we will open dealerships where we see a need. We sell franchises to investment groups and we currently have more than 700 applications for dealerships.”
According to Sánchez Andión, Toyota has three different sizes of dealership in Mexico and the average investment required for each one is between US$5 and US$6 million.
On the availability of spare parts for the after market, Sánchez Andión remarked: “We ask our dealers to stock the parts that are most used but we can get replacement parts within 48 hours and in some cases we can lend out demonstration cars.”
Sánchez Andión said that Toyota, which had retailed 2,200 vehicles in Mexico by the end of September, expected to have sold 5,000 units by the end of the year.
“We expect more aggressive growth in the coming years as we launch new vehicles and enter new market segments in Mexico.”
Tom Sullivan, managing director of Toyota Services de México, Toyota’s finance company, said in a separate interview that new Toyota vehicle purchases were being financed over periods ranging from three to 48 months and he added that, “effective November 1, we will roll out our leasing plan.”
Referring to the new vehicle market in general, he said: “We are seeing a major trend in Mexico towards purchasing new vehicles over 48 months. In the past few months 8 per cent of all new vehicles purchased have been over 48 months compared with only 4 per cent previously.”
He said his comments were based on data supplied by Jato.