Toyota shifts to rental cars, fleet sales for boost in slowing U.S. market


As automakers in the U.S. 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 Thursday 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 U.S. market on course for the first annual contraction since 2009.

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 U.S. market’s top-selling 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, Aichi Prefecture-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 U.S. and South 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 U.S. 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. President Donald Trump issued a statement to say he’s proud of what the company was doing and would support more growth of its U.S. operations by eliminating regulations and cutting taxes.

“We want to be the car capital of the world once again,” Trump said in the statement, which Toyota released on its website.

Of the Toyota employees offered transfers to Plano from other locations, 72 percent chose to accept them, Lentz said. This exceeded the company’s internal target of 50 percent and Nissan’s acceptance rate after it relocated North American headquarters to Nashville, Tennessee, from California more than a decade ago, he said.

Lentz predicted the move will allow Toyota to make faster, better decisions. Up until now, he said Toyota employees who predicted demand for sunroofs or the car colors that customers would want sat in Torrance, California, while those who actually set production schedules for each factory worked in a suburb near Cincinnati, Ohio. Now, they’re all part of the same team in Plano and report to one boss.

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