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Toyota Europe boss puts profit before volume, brushes aside Nissan challenge

Leroy: "We will never try to keep the No. 1 position if it generates less profit or, worse, generates no profits at all."
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Toyota Europe CEO Didier Leroy is not worried about rival Nissan's publicly stated goal of passing his company as Europe's top-selling Asian brand. Leroy puts profit before volume and he has returned Toyota's European operations back to the black. His success has earned him more independence from headquarters to take big decisions, such as making Toyota's cars "sexier." The Frenchman also has convinced his bosses in Japan to let him tweak models earlier than ever before. He spoke with Automotive News Europe UK Correspondent Nick Gibbs at the Automotive News Europe Congress in Brussels last month.

You have said that Toyota headquarters in Japan has given you more independence to make the brand "sexier" in Europe. How will this be achieved?

We were probably too rational in the past in terms of exterior and interior design. One of our key challenges was to develop a much more appealing exterior design. To do that we said we must be able to make big changes ourselves, including on existing cars in the middle of their life cycles. This is something that even two or three years ago was totally impossible, but we said now we are profitable in Europe, we can self-finance this activity.

Do you have an example?

This year on the [face-lifted] Yaris, a lot of the parts -- the front and rear of the car and interior -- are all totally new. It’s a much, much bigger change than anything we have done so far. But it must be profitable because we are talking about millions and millions of euros to do it.

Toyota has charged Europe with “defining and planning” global vehicles for the minicar, subcompact and compact segments. Is Europe solely responsible for every small Toyota?

The other regions will still have a say, but in Europe these segments are the most competitive in the world. Therefore, Toyota Motor Corp. said, ‘Please Europe, lead the way to define the expectation of the European customer, because that will be the expectation of the worldwide customer in the years to come.’ We will be a center of excellence for interior design and perceived interior quality. This hasn’t been one of our strong points, but we are making a lot of improvements and you will see this in coming years on the cars we introduce. The second key area is driving pleasure. Because in Europe people can drive on a wide range of roads, it means driving pleasure, for example, dynamic performance, is much higher than other regions in the world.

Meet the boss
NAME: Didier Leroy
TITLE: Toyota Motor Europe President & CEO
AGE: 56
MAIN CHALLENGE: Getting a strong return on investment from the big changes he is making to Toyota's key European models.

Nissan has said it wants to overtake Toyota in Europe by 2016. Do you have a plan to prevent that?

There is no benefit to playing this kind of game. It is good for us in that it obliges us to challenge our strategy, but we will never try to keep the No. 1 position if it generates less profit or, worse, generates no profits at all. When we sold 1.1 million cars [in Europe and Russia] in 2008 we were losing hundreds of millions of euros.

Are your hybrid car sales profitable?

Hybrids now account for 20 percent of Toyota brand sales [in all of Europe] and even more with Lexus. In western Europe, Toyota sales are 25 percent to 30 percent hybrids and 70 percent are produced here.

People ask what is more profitable, gasoline, hybrid or diesel? We never share this kind of information.

But when we increase the sales of hybrids, and we continue to generate profit you have clear evidence that the hybrid is profitable for Europe.

Will Toyota brand’s hybrid lineup in Europe grow beyond the Yaris, Auris and Prius?

Toyota said in 2007 that by 2020 all models in our lineup will have a hybrid variant and that’s still our goal. Hybrid is one of the key differentiators from our competitors.

Will we see more Toyotas using BMW four-cylinder diesels?

We’ve just introduced the 1.6-liter diesel on the Verso compact minivan produced in Turkey, but we will put BMW’s 1.6- and 2.0-liter diesels in other models. The next one will come at the beginning of 2015.

PSA/Peugeot-Citroen CEO Carlos Tavares wants to cut Peugeot models from 25 to 17 by 2016 – is the Peugeot 108 you build for PSA along with the Aygo in the Czech Republic safe?

The Peugeot 108 has a different customer target from the Citroen C1 and I can you tell the production volume as of [early June] was one-third Aygo and one-third C1 and one-third Peugeot 108.

NEW E-MAGAZINE
This story is from the current issue of the Automotive News Europe monthly e-magazine, which is also available to read on our iPhone and iPad apps.You can download the new issue as well as past issues by clicking here.

You can reach Nick Gibbs at nick.gibbs@btinternet.com.

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