GENEVA -- Toyota's entry into Europe's fast-growing small SUV segment was delayed because it was waiting for the company's Toyota New Global Architecture (TNGA) to become available.
"We know we're late, but we are now entering the market correctly," Toyota Europe CEO Johan van Zyl told a small group of journalists this week at the auto show here.
Toyota says that TNGA models provide good driving dynamics because of their lower center of gravity.
Production of the C-HR, which debuted Tuesday, will start before the end of the year at Toyota's factory in Turkey, making it the first TNGA model built outside Japan. The first vehicle to use the platform was the new Prius.
Toyota has invested 350 million euros to expand capacity in Turkey to 180,000 from 150,000 units. Van Zyl said Toyota picked Turkey because of cost efficiencies and the country’s strong supply base. "Turkey is a good site for exporting to all European markets," he added.
When asked whether the C-HR would be sold in North America, van Zyl said a decision has not been made. "This is a new-style vehicle and we want to see how European markets will react first. Our current focus is on Europe."
Toyota will offer the C-HR with a choice of either a gasoline, diesel or hybrid powertrain. Toyota Europe sale boss Karl Schlicht said adding the C-HR to its European lineup of gasoline-electric hybrids, which includes the Yaris, Auris, RAV4 and Prius, reflects the automaker's rising confidence in demand for alternative powertrain. "The rate of hybrid sales is getting faster," Schlicht said. "I’m not saying it is easy to sell hybrids, but it is much easier than it was three years ago."
Market watcher JATO Dynamics believe the Toyota will benefit from offering Europe’s first small SUV with a gasoline-electric hybrid powertrain.
"Following its good position within the subcompact and compact segment thanks to its Yaris and Auris hybrids, Toyota could take sales away from gasoline and diesel versions of rivals such as the Juke, which has been in the market for five years," Felipe Munoz, global automotive analyst at JATO, said in an email ahead of the concept's debut.
European sales of gasoline-electric hybrids rose 40 percent to 283,260, according to JATO's numbers.
Hybrid sales are increasingly significant to Toyota, Schlicht said. "They add premium-ness to the Toyota brand, help us with profitability and also help prepare for CO2 regulations in the future."
Last year Toyota sold 209,000 hybrids in Europe, accounting for 24 percent of total sales. It expects that to rise to 270,000 hybrids in 2016, accounting for 30 percent of the total. Hybrids currently account for 40 percent of Yaris sales and 60 percent of Auris sales. The proportion of RAV4 sales, currently 40 percent, is constrained by a six-month waiting list for supply, Sclicht said. Toyota's overall aim is for hybrids to account for 50 percent of its global sales by 2020.