News/toyota1.gif”>Australia’s number one car company is running close to five years ahead of its export sales schedule and planning to ship around half its total car production during 2001 to overseas owners, writes Paul Gover.

Toyota Australia earned $A1 billion ($US567 million) from offshore sales during 2000 and expects to export close to 50,000 Camry cars during 2001 from its Down Under production headquarters at Altona, just outside Melbourne.

Most will go to the Middle East, where Toyota has blazed a lucrative Australian-made trail now followed by Holden (the Australian arm of General Motors), Holden Special Vehicles and – with the first exports expected to begin this later year – Mitsubishi.

“Exports are booming and we’ve almost achieved our five-year plan target in the first year. This coming year we may exceed 50,000, which was our goal for 2005,” says Toyota Australia’s senior executive vice-president, John Conomos.

Exports of completely built-up (CBU) Camry and Avalon cars rose by more than 28 per cent in 2000 to over 45,000 cars, with an extra 9000 Camry completely knocked-down (CKD) assembly kits exported to countries including Thailand, Malaysia, Vietnam and Indonesia.

Australian produced Camry gets export push.

Toyota is now selling its Camry to 34 countries, led by the Middle East bloc, but even its $A1 billion in export earnings and a return to number one in Australian sales won’t give it a black-ink bottom line for its operations last year.

Conomos – who heads Toyota Australia’s sales operation – says the diving Australian dollar has taken the edge off his company’s profitability, even though it beat GM’s booming Holden division and the struggling Ford Australia to re-take the number one showroom spot in a strong market of 787,100 vehicles.

“I think we’ll come in better than budget, but still slightly in the red. The final result will be a bit better than than we expected, and it’s all due to currency movements,” says Conomos.

It’s a familiar story in the Australian motor industry, which was slugged by a downturn as buyers waited for price cuts following the introduction of the Goods and Services Tax (GST) in the first half of 2000, and by dollar-driven price pressure in the second half.

Toyota is the most pessimistic of the major Australian carmakers in 2001, predicting total industry sales of 750,000 vehicles despite an official forecast of 780,00 by the Federal Chamber of Automotive Industries.

“We’re calling it at about 750,000, but we did that forecast before I went on vacation, and [we’ve since had] the downward pressure on interest rates and the dollar’s recovery,” says Conomos.

“We might have to revise it a bit. But our concern is how long these things will last.

“The economy is strong, the exchange rate is strong today, but we don’t know if it’s sustainable.”

Conomos says the Australian dollar dived by 48 percent in the two years to December, making a massive impact on profitability across the industry.

“Every change of one yen [against the $A] costs us $A7-8 million on the bottom line,” he says.

The company had recovered less than 10 percent of its dollar losses and has been forced on to a major cost cutting programme.

“There is nothing that has not been affected by our desire to get costs down”

“We’ve been able to raise prices by only nine per cent. We went up by 3.9 percent for imports and 1.9 per cent for locally-produced cars on January 1.

“Local cars are guided by local content, but we bear the full torture on imports.

“We ripped a lot of cost out of just about everything we do. There is nothing that has not been affected by our desire to get costs down.”

Even so, Toyota Australia is readying for 10 major new-model introductions in 2001 – matching the figure for 2000 – and has committed $A207 million for fresh investments for the coming year.

Top of the list is $A118 million for new-model development and tooling, with $A58 million for improvements at Altona and $A35 million for engine development and planning.

Toyota will also spend $A24 million on e-commerce and computer systems.

Conomos says Toyota Australia is doing well, even though first-year sales of its big new Avalon – its first tilt at Australia’s top selling Holden Commodore and Ford Falcon – have not been as strong as forecast.

“We’ve achieving the private market targets. [But] we need to learn how to sell large cars. We just have to lift our skills.

“It’s the fleet market that’s letting us down. We’re disappointed in the short term, but we are in it for the long term.

“We’re up against some very tough competition in fleets, and we’re losing by up to $A7000 a car. That’s outrageous. We’re not prepared to gut the car to do those sort of sales.”

Conomos says Toyota has no plan to export the Australian Avalon (a car originally developed for the U.S. market and still built there), which uses superseded American sheet metal and a lot of Camry-based components, any further than nearby New Zealand, at least until the next full model change.

Avalon will not be exported beyond New Zealand

“We’ve got to get it right here first. It was the same with the Camry.

“And right-hand drive large-car markets are few and far between, and usually take the latest model.”

On the domestic front, Conomos predicts a continued run at number one despite the strength of Holden and challenges from cut-price Korean brands. It has topped the sales charts for six of the past 10 years, losing only once to Holden and three times to Ford in that period.

“When we lost leadership in the mid-90s it was purely on price. The Corolla was the same price as a Commodore. Now we’re in good shape. In great shape,” he says.

“I think the reasons for that are quite substantial and scientific. Our plan is to be best in each category we contest, and we won eight of 12 last year.

“We plan to increase our product presence and performance. Currency is the only thing that we can beat us.”

Author Paul GOVER is national motoring editor of News Limited, Australia.