BRUSSELS -- Toyota aimed its boldly styled C-HR at the European market, and so far, that focus appears to be paying off.
Since the C-HR's introduction early this year, it has become the Japanese brand’s third-largest seller in Europe and has established itself as a top contender in the fast-growing compact SUV/crossover segment.
Nissan’s Qashqai, with 75,114 European sales in the first quarter, according to figures from JATO Dynamics, is the segment sales leader. The C-HR, with 31,888 units sold, figures strongly in the mix with the Ford Kuga (40,033), Peugeot 3008 (37,163), Renault Kadjar (29,474) and Seat Ateca (21,707).
Toyota has said it expected to sell 100,000 C-HRs annually in Europe and early demand has strained production at the company’s plant in Sakarya, Turkey, said Matthew Harrison, vice president of sales and marketing at Brussels-based Toyota Motors Europe.
Harrison said that 80,000 sales contracts had been taken through the end of April.
"This year, we will comfortably sell more than 100,000, probably toward 110,000," Harrison said. "We have more than two months’ worth of order bank, in terms of consumers waiting. We are having to reallocate supply in order to avoid customer dissatisfaction or unnecessary waiting times."
In the original planning for the C-HR, "We were talking about lower volumes than this,"Harrison said. "As people started to see final design, execution and pricing, there was a surge of confidence. Combined with a booming crossover segment, we already knew 12 months before we launched the car that demand would potentially be ahead of what we could produce."
Target: Young buyers
The C-HR, which stands for Coupe High Rider, first appeared as a concept at the 2014 Paris auto show, and was shown in production form at the 2016 Geneva show. It uses Toyota’s New Global Architecture, which also underpins the latest generation Prius. European production began last November in Turkey, on the same lines as Corolla and Verso models, with the plant’s capacity expanding to 280,000 vehicles from 150,000. C-HRs produced in Turkey are being exported to the United States, where sales started this spring.
Toyota sees the C-HR, with its unconventional styling, as a way to attract younger buyers in Europe. Harrison said the average age of Toyota customers is 56 or 57, several years higher than the industry average.
"The brand is seen as a very respected one that is about quality, durability and reliability, probably one that people choose for mostly rational reasons," he said. "Not so cool and appealing to a younger audience."
"One of our aspirations for the brand is to create a little more fun and excitement," he said.
Toyota has trailed some of its European competitors in developing a full SUV/crossover lineup, Harrison said. "We’ve been very strong and focused over the past decade on the traditional core segments,” he said, but the crossover segment boom and the speed of it "definitely took us a little bit by surprise.”
There is room in the Toyota lineup for more SUVs and crossovers, he said. Currently, the company has just three in Europe: The CH-R, the midsize RAV4 and the full-size Land Cruiser.
"There’s plenty of opportunity for us between C-HR and Land Cruiser," he said. "It’s not a territory you want to cover with just RAV4."
A diesel engine is not available on the C-HR, and Harrison said about 80 percent of buyers chose a hybrid drivetrain.
While the C-HR has contributed to surging sales for Toyota in Europe, the company’s performance in its European region, which includes more than 50 countries including Israel, Turkey and Russia, has been mixed.
Sales rose to 924,650 units in the 2017 fiscal year (ending March 31). The company's focus on gasoline hybrid drivetrains could give it an edge as pollution standards tighten and buyers turn away from diesels in the wake of the Volkswagen emissions scandal.
Despite higher vehicle sales, Toyota's European operations swung to a 12.2 billion yen (98.3 million euros) operating loss compared with an operating profit of 72.4 billion yen (583 million euros) a year earlier. Negative foreign exchange impacts and a year-end contribution to Toyota's global recalls contributed to the loss.
Toyota Europe said additional marketing efforts, increased volumes and accelerating cost reductions has increased operating income on a like-for-like basis.
Harrison said: "We have been growing, mostly holding share in a recovering market. I think we are moving into a phase with the C-HR introduction where we have got real product-led share growth."
Based on new vehicle registrations, Toyota brand had a 4.5 percent share of the European Union and EFTA markets through April, according to data from industry association ACEA, compared with 4 percent in the same period in 2016. Sales increased 17 percent in the same period, to 245,072.
Toyota holds the top European market share for Asian brands, ahead of Nissan at 3.9 percent, Hyundai at 3.2 percent and Kia at 3 percent, according to ACEA.