Australia’s love affair with Toyota is ending amid a changing market

Is Toyota starting to go off? The giant Japanese car brand is still the best-selling in the country, but 2023 is not looking like a great year for Toyota. It has tumbled from controlling 21.7% of our market in 2022 to 17.2% in 2023.

As the next chart shows, almost all Toyota models have sold fewer units this year than in the previous year, with the chief exception being the Corolla Cross, which hadn’t been introduced this time last year.

The Corolla Cross, by the way, looks like smart marketing. Rescue one of your most iconic brand names from a dying class of vehicles (small hatchbacks) and stick it on a booming class of vehicles (small/medium SUVs). The car itself looks unremarkable, but that’s exactly what the Corolla brand promises. It’s plain and mainstream, like a pair of pants from Uniqlo (another Japanese brand selling mid-market items we can’t seem to get enough of!).

But other than that, Toyota lacks winners. The fall in Toyota’s market share is 4.6 percentage points — far bigger than that of the second-biggest loser, Mitsubishi, which lost 2.4%.

Toyota is hurting in a few segments. It sells HiLuxes, but the commercial ute market is not booming anymore. It sells passenger sedans, and that market is shrinking too. It sells hybrids, which have stopped growing in popularity. What it doesn’t sell is electric vehicles (EVs) and they are doing very well indeed. Tesla, BYD and MG are all growing their market share strongly.

Toyota’s kaizen system

Henry Ford may have invented the production line but Toyota made it sing.

Its kaizen system revolutionised factories. Instead of just standardising practices in the factory, they empowered staff to improve them. Kaizen means “change to make better”. The workers in Toyota factories aren’t mere drones, they’re responsible for the system’s success. The rest of the manufacturing world has slavishly copied the production systems Toyota invented. The results speak for themselves.

There’s a reason you’ll find Toyotas all over the world — from the Sahara to the Arctic Circle, the Pacific to the Himalayas. Warlords drive them, as do UN Peacekeepers. They’re reliable. We all love them: uni students in Yarises, pastoralists in LandCruisers, hipsters in Priuses and hoons in HiLuxes.

It’s a real shame Toyota didn’t embrace EVs because that category could use their careful attention. Teslas are renowned for their slipshod quality (which is what you’d expect from a Silicon Valley startup, really). The Elon Musk-backed company has made some great innovations, but dialling in precision at the same time is a big ask. If Toyota was big in EVs we would have a quality benchmark. Instead, we have a new era of Chinese-made EVs on the market. They seem genuinely great — I test-drove a BYD and loved it — but it doesn’t have the decades of performance that permit me to believe it will still run like a dream in ten years.

Fading in a booming market

Overall, Australians are buying more vehicles than ever. Sales this September were the highest ever seen in that month. Why? Well, over the pandemic, supply slowed down, so people held on to their old cars. Many people were already delaying buying a new vehicle so they could make sure their next car was battery-powered. Now that battery-powered cars are on the market in real numbers, those car buyers are finally buying, with the flow of petrol vehicles still ample enough to satisfy other buyers too. We’re no longer snapping up used cars in desperation. Used car values have been falling for nearly two years now.

The fade-out of Toyota, along with Mitsubishi, is not about currency movements.

The Japanese yen is weak against the Aussie dollar right now, so Japanese cars should be cheap. It’s not like the US dollar. We’re tumbling against that currency, which should mean US-made cars get more expensive (and will hopefully put to the sword the recent silly trend to buy enormous trucks made by RAM and Chevrolet). To win back our hearts Toyota needs to rush its battery electric vehicles to market. It claims to have an amazing solid-state battery in development, which could be ready by 2027-2028. But instead of waiting for that technology to come to fruition, it wouldn’t hurt to sell an e-Corolla with a standard lithium battery in it. Australians would flock to it.

This article was first published by Crikey.