Diaz Ruiz says the Yaris shows where Toyota is going. Inset: Toyota's Brussels headquarters.
BRUSSELS The unexpected worldwide success of Yaris, Toyota's new supermini which is the current European Car of the Year, has caused headaches for Toyota Motor Europe's top management; the kind of headaches auto executives don't mind.
President Akira Imai and Juan Jose Diaz Ruiz flew to Japan earlier this month to plead with their parent company for an increase in Yaris production capacity. There's a three-month waiting list for Yaris in Europe because the Japanese and US markets liked the little European car so much they decided to sell it as well.
Known as the Vitz in Japan and the Echo in the US, Yaris is a runaway hit in Toyota's major markets. But its biggest success has been in Europe. Yaris has not only helped Toyota change its conservative image and draw younger buyers, but it has fueled record sales.
Toyota's European sales grew 27 percent in the first quarter, compared with 15.8 percent for all Japanese makes, largely because of inroads by Yaris, especially southern Europe, where Japanese imports had been severely restricted because of quotas.
The Yaris is also making Toyota a serious challenge to Europe's traditional volume makes.
'Yaris is clearly the first really hot Japanese car that we've seen in Europe and it's obviously creating an image for Toyota,' said John Lawson, an analyst with Salomon Smith Barney in London.
Toyota is so proud of the Yaris that the front of its corporate headquarters in Brussels has become a billboard for the car. 'Yaris. Car of the Year 2000,' was painted in massive letters onto the faAade of the modern glass building.
'Yaris more than anything else shows where Toyota is going and how Toyota is trying to reinvent itself,' said Juan Jose Diaz Ruiz, executive vice president for sales and marketing.
'Toyota is a long-term planner, we don't improvise,' he said. The strategy is to boost Toyota sales to 800,000 units by 2005 from 592,000 units last year, and grow market share to 5 percent from its current 3 percent level. Toyota's growth plan has four elements: increased local production, a more excitig image, European design flare, and a stronger dealer organization.
Toyota execuitves say they've made huge strides in all four areas:
Production capacity has been doubled at Toyota's factory in the UK to more than 200,000 units and its new 150,000 plant in France will begin assembling the Yaris next year.
With Yaris as the validation of its European design theme, Toyota opened a new European design center in Nice, France, earlier this month.
Toyota's brand image has been spiced up with new advertising and the launch of redesigned niche models suxh as the new Verso compact van and sexier replacements for the MR2 sports car, Celica sport coupe and RAV4 compact sport-utility.
The Toyota dealer body is being streamlined and Lexus is becoming a separate and exclusive franchise.
The strategy is paying off. Toyota is still adhering to its 2000 sales forecast of 600,000 units, up slightly from last year, despite the strong first quarter. April sales will likely be up 47 percent over the same period last year. Based on the first four months, Toyota sales this year could increase to 645,000 units by years end, said Diaz Ruiz.
Toyota's Europe executives knew spicing up the brand's image had to go hand-in-hand with a new product offensive.
'Toyota had an image for being extremely reliable and high quality but we needed a bit of excitement, freshness and dynamism and we've done that,' said Diaz Ruiz.
Toyota's marketing now reflects its new image, with a focus on pan-European advertising - including more television campaigns.
The product offensive was launched last year with the introduction of the Yaris. The Yaris has a conquest rate of 77 percent, with buyers coming from a wide range of competing makes, especially Volkswagen, said Diaz Ruiz.
In addition to Yaris and Verso, Toyota has also replaced the Corolla and Celica.
five other new models will be introduced this year, including the revamped MR2 sports car, Previa minivan, RAV4 sport-utility, Prius hybrid, Lexus LS flagship, and supercharged versions of Yaris and Celica.
But to insure longer-term growth and reaching its 2005 sales goal, Toyota also had to restructure its European dealer organization, said Diaz Ruiz.
Last March, at the time the Yaris was shown to dealers, Toyota out-lined its dealer-restructuring plan called Challenge 2000. Toyota is trying to increase average dealer sales from the 1999 average of 222 units to 252 by the end of 2000 and 300 in 2005.