With the iQ, Toyota made a bold statement: We will sell a tiny car – less than 3000mm – at a not-so-tiny launch price of more than 12,500 euros. Toyota planned to sell 60,000 iQs a year in Europe, but in 2011 sales fell below 13,000. Did you misjudge the market?
The iQ is one of the flagships of Toyota's engineering capabilities and concrete example of our pioneering spirit. At the launch, we faced the challenge of the most severe financial crisis that Europe had suffered in the decades, combined with a significant deterioration of the yen/euro exchange rate. For Toyota, the iQ remains a key icon that positively contributes to our brand image.
Sales of small SUVs and small crossover are growing but demand for your Urban Cruiser almost halved to less than 7,000 units last year. What happened?
Similar to the iQ, the yen's strengthening did not allow a price positioning in line with our main competitors. Nevertheless, the Urban Cruiser remains extremely popular in markets and geographical areas where small SUVs are not only a fashionable choice, but fulfill a real need for a highly reliable, versatile and capable all-roader.
Toyota already builds its core mass-market products such in Europe. Do you need to add niche models to your local manufacturing?
We will continue to focus European production on core models for the European market, meaning A-, B- and C-segment cars, which represent the vast majority of our sales.
Do you need more, or different, imported products?
A right-sized lineup is an exercise in balance. You need enough products to properly cover the market, but not too many, because this increases complexity, both at the dealer level and for customers.
Do you need to add or eliminate dealers from your European network?
Toyota's network is right-sized. We have very good dealers. Should the market worsen even further resulting in extreme conditions, no manufacturer will avoid these issues, but up until now, we are proud of our dealers, who continue to perform well and provide customer service at the highest level.
Toyota's European production was affected last year's natural disasters even though you source almost 90 percent of your parts locally. How is Toyota addressing the problem?
The initial effect of the earthquake was severe, but we recovered European production much more quickly than initially anticipated. The Thailand floods had no impact on local production, it only delayed sales of some imported cars. To mitigate the effects of such catastrophes on our global supply chain in the future, the company as a whole is focusing on having more standard parts, increasing regionalized parts sourcing and having a more diversified network of Tier 2 and beyond suppliers for some parts.
What is the significance of Toyota making Europe its global planning center for the A-, B- and C-segment cars?
For these segments, our voice leads the way regarding how Toyota will develop these cars in the future. These vehicles are at the heart of the European market and business.
What is the future of diesel-powered cars in Europe?
Euro 6 emission standards will have repercussions on the price of diesel models, making them more expensive than today, especially for small and mid-sized cars. At Toyota, we see gasoline hybrids as the most-efficient solution from well to wheel.
PSA/Peugeot-Citroen is the first automaker to sell a a diesel hybrid passenger car. Will Toyota follow?
A diesel hybrid is too expensive because it combines the cost of two expensive technologies. In Japan we offer a diesel hybrid powertrain, but it is on a Hino heavy truck.
Why has Toyota been slow to get into the race to offer so-called battery electric vehicles?
We see BEVs only as being a solution for short urban trips, while a plug-in gasoline-electric hybrid is the best solution for both weekday city commuting and weekend trips. Our researches show that more than 80 percent of European urban daily trips are shorter than 20km and our plug-in Prius drives 25km in pure electric mode.
How important is Russia for Toyota?
It is a huge market for Lexus and for big SUVs. We are expanding our St. Petersburg plant to build 25,000 units a year of the Camry mid-sized sedan. This will permit us to meet Russian rules regarding local production as last year we sold 25,000 Camrys with the addition of some imports. As our local production increases, we increase the possibility of being able to rely on locally sourced parts.
Turkey also has significant growth potential. We have announced that a next-generation C-segment sedan to replace the Auris hatchback will be built at our Turkish plant because we know that sedans sell better than hatchbacks in that market.