What is the hybrid sales mix for the new Yaris compared with the previous generation?
We expect to reach more than 80 percent.
What is the hybrid mix that you expect from the Yaris Cross? When will it come to market?
In many of the western European markets it will be 100 percent. Production is starting now, so it will be on sale in September.
What volume are you expecting from both models in 2022, after a full year of Yaris Cross sales?
For the Yaris Cross, something close to 150,000 sales, and the Yaris will be about 200,000, so the total between the two vehicles will be around 350,000. The vast majority of our growth is coming from the Yaris Cross introduction.
The Yaris was Europe's best-selling car in January, and is third overall in the first half after the VW Golf and Peugeto 208. Were you expecting that?
We didn't think we would achieve that result so quickly. Powertrain-wise, the timing was great as consumers shifted toward hybrids as a proven, reliable alternative. And perhaps one or two competitors were struggling a little bit with availability in the first quarter. We were running consistently fifth or sixth in the passenger-car ranking in Europe with the Toyota brand, so it was a surprise to see us suddenly up in in the top three positions and then actually surpassing Renault to reach No. 2.
This year the EU will introduce on-board monitoring of real-world fuel consumption. This is seen by environmental organizations as a way to unmask plug-in hybrids as being less efficient than promised. What is your opinion?
From our perspective, plug-in hybrids have an important role to play in reducing overall emissions, particularly during this period where the infrastructure needs to further develop and the financial accessibility of full-electric models is still -- certainly without incentives -- difficult for many. I had the pleasure to drive a RAV4 plug-in hybrid for an extended period this year, and I was never out of EV mode. Plug-in hybrids are clearly growing to a significant proportion of sales, but more in the premium sector and more with larger products such as crossovers or SUVs than with smaller or compact products.
Toyota Europe had a very strong fourth quarter [January to March 2021], with a 4.9 percent margin compared with 3.7 percent in the full fiscal year and 4 percent in the previous fiscal year. Can you maintain a margin of more than 4 percent margin for the entire fiscal year?
Our ambition is to sustain that level of performance or better. I think a 5 percent operating margin target is realistic for us. The fourth quarter was above the full year because of the COVID-19 restrictions we experienced earlier in the year. We had a very slow start to the fiscal year [that started April 1, 2020] and a progressive improvement quarter by quarter and a strong finish, partly because of the lessening in restrictions, but partly because we also got better and better at understanding how to optimize our business in those conditions and how to communicate with customers in a more effective way.
What tailwinds are helping Toyota Europe and what headwinds are holding you back at the moment?
We have some healthy tailwinds. There are some that apply to everybody as the market is recovering, although it's a bit slower than we expected, impacted by semiconductor shortages. But for Toyota, our product power is very strong, and all of our core models are performing extremely well. It’s not just Yaris, but in the compact segment Corolla demand is strong and ahead of plan, and the C-HR is holding its own extremely well, despite the competition in the C-SUV segment. Beyond that, we have put a lot of our focus on cost reduction, not just challenging fixed, variable and travel costs, but also on revenue optimization. In terms of headwinds, raw materials costs remain quite a challenge, for example steel. The semiconductor shortage, while it has not been a reason for us to miss our sales target, has also prevented us being more ambitious with our sales outlook for the year because production is constrained, although some of that is also about our own run-out and ramp-up strategy. We have got three very important SOP [start of production] events this year: the Yaris Cross, the Yaris hatch in the [Kolin plant in the] Czech Republic and then ultimately the switchover from the current Aygo to the new A-segment vehicle [also in Kolin] at the end of the year. The currency exchange rate, particularly the Turkish lira, is a bit of a headwind as well.
When do you think the semiconductor situation will be back to normal?
We expect the second half to be maybe easier than the first half, but the situation is still very volatile and the outlook is still uncertain, particularly through September. There are many parts-tracking challenges because you are getting down to Tier 2 or Tier 3 suppliers where visibility isn't as transparent.