Toyota Turning Toward Rental Fleets and the RAV4 to Boost Volume
We’re beginning to pummel a dying horse here but, as you already know, the North American automotive market is shrinking right now. Toyota wants to mitigate this by funneling sales into rental fleets. While this tactic has become unpopular with automakers like General Motors, others have bolstered fleet sales to cope with the lackluster demand. Hyundai, for example, has relied heavily on rental companies to boost its total volume, but the move has placed dealerships and the corporate office at odds with each other.
Toyota’s U.S. deliveries fell 3.6 percent through June of this year, which is 1.5 percent ahead of the industry’s overall decline. The automaker wants to fill the gap by ramping up volume to rental companies before the end of 2017. Like Hyundai, Toyota’s best sellers are passenger cars — which have taken the brunt of consumer apathy of late — but knows it can still unload them on Enterprise, Avis, and Hertz.
The brand’s fleet deliveries were down about 20 percent during the first six months of 2017, according to Jim Lentz, head of Toyota’s North American operations. “A lot of our fleet sales are backloaded into the second half,” Lentz said in a Thursday interview with Bloomberg. “We’re confident we’re in good shape for the rest of the year.”
However, Japan’s biggest automaker hadn’t anticipated consumer sales slipping quite this much and originally planned to scale back fleet sales even further. Toyota sold about 219,700 vehicles to fleets in 2016, roughly 9 percent of its total volume, according to the Automotive News Data Center. It’s going to attempt to hit that mark again by the end of 2017.
Lentz also said the brand is also boosting production of the Highlander, Sequoia, and Sienna in Indiana and the C-HR crossover in Turkey. While it’s unlikely that demand for the Sequoia or Sienna will grow by leaps and bounds this year (at last not enough to offset waning car demand), sales for the Highlander are up by a fair margin. The C-HR is still too green to be a known quantity but the automaker has high hopes for the weird little crossover.
However, the real heavy lifting will be performed by the Toyota RAV4. With 2017 on track to be its best year ever, the company has accelerated production coming out of both Canada and Japan to take advantage. June deliveries for the RAV4 are already up 24.7 percent over last year’s volume.
[Image: Toyota]
A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.
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On the way home from a five-day 'fishing' trip yesterday I saw three VW Golf rentals. All three were the 2.5L and, no, they weren't travelling together: it was over three hours from Golden, BC, to Okotoks, AB. Where does one rent a Golf? I'd love to try a new one for a weekend.
The rental company mechanics will be happy, or unemployed.