Toyota Looks to Subaru to Raise Camry Sales to 500,000 per Year
Camry Photos
Toyotas 8.7 Percent Stake in Subaru is Already Paying Off
Strangely, Toyota, a bastion of automotive convention, actually flies in the face of long-established “rules” of success, at least in some ways. Take, for instance, the styling of its top selling Camry, which is also the number one selling passenger car in the U.S. Most industry pundits and automaker execs would tell you that a vehicles design is critical to its success, but Toyotas conservative four-door has never been the poster car of automotive aesthetics. Still, year after year it remains on top of the heap. Chrysler might take kudos for bold, innovative design with its popular 300 sedan, and Ford has more recently been getting the nod for its impressive new Fusion, but despite such fresh new designs the Camry stays number one.
If there something particularly special about the Camrys interior styling, performance or standard features, or maybe an especially attractive price point or warranty, its success would make more sense. Rather, the Camry has a name for build quality, a high resale value and reliability; despite not necessarily being the topmost dependable car in its segment according to Consumer Reports magazine and J. D. Power and Associates.
Top honors for reliability going to the Chevrolet Malibu in J. D. Powers annual 2005 Vehicle Dependability Study (VDS). Heck, the Camry doesnt even rate for second or third positions according to J. D. Power, with the now defunct Oldsmobile Alero and more popular than ever Hyundai Sonata as consecutive runners up. OK, this study is for cars that are three years old, what about midsize sedans being built today? Fair enough. In J. D. Powers 2005 Initial Quality Study (IQS) the Camry was once again shut out of the top three, first place once again going to the Malibu sedan, second to the Sonata and third to Volkswagens Jetta.
And what about Consumer Reports magazine? The editorial team named Hyundais Sonata as the most reliable car available in the U.S. last year, but the Camry is recommended in its “CR Good Bets” section, where it lists those cars that achieved a “better-than-average Used Car Verdict” in tests. This said, the Buick Regal (now the LaCrosse), Honda Accord, Mitsubishi Galant, Nissan Altima and Subaru Legacy also made this list.
Still, the Camry continues on as Americas top selling passenger car and will probably remain so going into its sixth generation come the 2007 model year. How many does it sell? Sales topped 430,000 in 2005, which is remarkable to say the least, but with a much more stylish new body, dramatically improved performance, greater interior roominess and more features, plus that well-earned marketplace perception for dependability and build quality, Toyota believes sales will grow higher yet, even surpassing the half million mark. Whats more, it is expected that before 2010 all Camrys will be made in the U.S.A.
Toyotas Georgetown, Kentucky plant, where the majority of North American-bound Camrys are built, cant keep up with the entire 430,000 yearly Camry output, and with a new hybrid version scheduled to join the conventionally powered Camry at the same facility, constraints will only get tighter. What to do? Find a partner with a similar reputation for quality control, and build excess volume at one of its plants.
The seed was sown when Toyota purchased 8.7 percent of the shares General Motors holds in Japanese automaker Fuji Heavy Industries, back in October of last year (see automotive news section of this site for Nov 18, 2005: New Relationship between Toyota and Subaru Beginning to Take Shape). Now the two automakers can benefit from the new relationship, Toyota getting access to Subarus unused capacity in the second companys Indiana manufacturing plant, and Subaru keeping its workers employed and earning a tidy income.
To start, Subaru Indiana Automotive Inc. will build about 30,000 Camrys in 2007, that number rising to 90,000 by 2009, if needed. In total, Subaru Indiana can produce a maximum capacity of 100,000 Camrys per year.
According to a report in Automotive News, Toyota CEO Katsuaki Watanabe doesnt expect the additional output from Subarus Indiana plant change the production mix in Georgetown, where it builds Camrys, Avalons and Camry Solaras. Rather, he hopes to see the number of Camry imports reduced “to zero”.
This wont be difficult, mind you, as Toyota only imported 28,816 Camrys from Japan last year, making up just 6.7 percent of Toyotas 431,703 U.S. Camry sales in 2005. This means that, with an approximated 30,000 unit import deficit to make up via Indiana production, about 70,000 additional Camrys would be available to new customers. With the hybrid model being added to Georgetown, attracting a mix of carryover and conquest Camry buyers to the model, and adding to that the much more appealing 2007 iteration, it shouldnt be difficult to find 500,000 Camry customers per year.
That 2007 model, incidentally, started production in Georgetown in mid-February, with deliveries to dealers expected soon.
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