Toyota turns to rental cars for boost in US market

Bloomberg

As automakers in the US struggle to keep selling new cars to American consumers at a record clip, Toyota Motor Corp. plans to turn to rental car companies and other fleet operators for a boost.
Toyota will nearly match last year’s total sales to fleet customers, which means the company has some catching up to do. Deliveries to rental car companies and other fleets were down by about 20 percent during the first six months of the year, according to Jim Lentz, chief executive officer of Toyota’s North American operations.
“A lot of our fleet sales are backloaded into the second half,” Lentz said in a phone interview before the grand opening of Toyota’s new North American headquarters in Plano, Texas.
“We’re confident we’re in good shape for the rest of the year.”
Investors and analysts tend to look down upon fleet deliveries because bulk purchase discounts tend to render them less profitable than sales to actual consumers. A pullback in fleet sales by Toyota and peers including General Motors Co. contributed to industrywide vehicle sales dropping during each of this year’s first six months, putting the US market on course for the first annual contraction since 2009.

SUV SHIFT
Toyota has been hit harder than many of its peers by a rapid shift in demand toward sport utility vehicles and away from sedans like the Camry, the US market’s top-selling passenger car for the last 15 years.
Toyota’s deliveries fell 3.6 percent through June, outpacing the industry’s 2.1 percent decline, according to researcher Autodata Corp. The Toyota City, Japan-based company lost market share each of the last two years as SUV demand climbed.
Deliveries to rental-car companies and other fleet customers tend to make up a lower portion of Toyota’s overall sales compared with US and Korean automakers or Japanese peer Nissan Motor Co. Toyota sold about 219,700 vehicles to fleets last year, about 9 percent of its total, according to Automotive News Data Center.
Another reason Lentz has a brighter second-half sales outlook for Toyota in the US is accelerating output of RAV4 crossovers from plants in Canada and Japan. He predicted the company will sell 400,000 RAV4s this year, enough to surpass the perennial leader in its lineup, the Camry.
Toyota also is boosting production of Highlander and Sequoia SUVs and Sienna minivans at a factory in Indiana and C-HR compact crossovers in Turkey, Lentz said.
Sales at Toyota’s Lexus luxury division will be more than 300,000 vehicles this year, Lentz said, even as the company declines to match deep discount offerings by some of its competitors. Lexus reported deliveries of 331,228 cars and SUVs for 2016.
Lentz spoke as Toyota prepared for the opening of a $1 billion corporate campus the company has been constructing that consolidates North American sales, engineering and finance organizations in the Dallas suburb. The North American headquarters will eventually house 4,000 workers, including about 1,000 new hires from Texas and transfers from Toyota facilities in California, Kentucky and New York.
Toyota started planning the move in 2013, Lentz said in a Bloomberg Television interview.