After several tough years that have seen Toyota’s market share in Thailand slide sharply, the top-selling brand is looking forward to a strong 2018 where it expects to significantly outperform a market that has stemmed a four-year slide.
That is the view of recently appointed Toyota Motor Thailand President Michinobu Sugata as the automaker outlines its projections for the year.
“This year Toyota humbly would like to regain lost ground,” Sugata says. “We aim at outperforming the market this year.” His targets are ambitious: a 17% sales increase for cars and 30% for commercial vehicles, which would add up to an extra 60,000 units.
Sugata reckons Thailand overall will record 900,000 sales, a 3.4% improvement over a 2017 market that was a key turning point after a long decline. Toyota’s target is 300,000 sales – one-third of the market.
He attributes the positive economic outlook in part to the government’s substantial investment in infrastructure. Sugata also cites the availability of affordable credit in Thailand, where 80% of people buy cars with loans.
After historically holding about 40% of the market, last year Toyota’s sales came in at just over 27%, the result in part of failing to follow emerging market trends and resting on its laurels with some of its more recent products.
Unusually for Toyota, Sugata admits the automaker’s recent weaknesses, saying, “I think last year was quite tough for Toyota. Our growth is below the market.” Toyota sales rose 2% against a market up 13%.
He puts some blame for that on the release schedule for critical new cars. “New models were introduced in the fourth quarter and didn’t reach expectations for the full year,” Sugata acknowledges, but adds those new models “received a fairly good reception from our customers.”
Models introduced late last year included the Yaris ATIV subcompact and a restyled Hilux Revo pickup truck. “Those new models could help the full year,” he says. “This includes new models we are introducing this year, including C-HR, so we can increase our sales by 60,000 this year.” That would bring Toyota up to its 2018 target of 300,000 units.
Toyota Thailand’s exports fell 6% to 300,000 units in 2017, the result of “a substantial drop (in) the Middle East” and a less-favorable model mix, Sugata says. “This year we don’t expect this to recover.
“Toyota exports to more than 100 countries. The (strength of the) baht doesn’t affect exports – drops in demand depend on the market – but the baht increase does affect our income, so we have to save costs. Whatever the rate, we have to be prepared.”
Sugata doesn’t see any short-term improvement in the Middle East picture, noting excess capacity will be filled by increasing orders from the other export regions, and he is keen to point to the “halo” of the recent exporting of completely built-up Hilux units to Japan. “The Hilux is sent to Japan, but volume doesn’t have an impact on sales,” he says.
“Other export markets (Europe and the U.S.) are quite good (and) should cover the drop in the Middle East.”
Sugata says the market recovery in Thailand somewhat reflects the wider ASEAN region. “Leading growth (this year) will be Thailand and the Philippines,” while Indonesia also is poised to improve.
He notes Myanmar suddenly has stepped into the ASEAN picture. “In Myanmar, we sold 1,800 cars (in 2017, which is) significant growth compared to the last four or five years when we used to see only in the hundreds of cars.” He links this to a government effort to take older cars off the roads.
In Vietnam he notes, “the economy is good” but there has been a slowdown in demand as consumers “want to wait for zero tariffs” that are coming with the ASEAN Economic Community. While Toyota and other stakeholders are pushing to enact this, he says the government is resisting.