Toyota Australia tried to fund its own investment in future models before approaching governments for support.
Toyota asks for more taxpayer funding for a third model, despite massive losses.
Toyota has lost a staggering $700 million in three years but is negotiating for even more taxpayer dollars to build a new model in Australia.
A senior company insider has revealed to News Limited the gut-wrenching size of the loss – which equates to about $3500 for every car Toyota exported to the Middle East over the past three years.
In the same period, the Federal and Victorian governments contributed almost $100 million to Toyota’s manufacturing operations: $35 million to go towards the local production of the Camry Hybrid and a further $63 million to go towards a $330 million upgrade of Toyota’s engine factory at Altona.
Toyota Australia senior executive director Dave Butter has confirmed to News Limited that the company is looking to build a third vehicle alongside the Camry four-cylinder and Aurion V6 sedans and that preliminary discussions have begun with state and federal governments regarding taxpayer support.
“We have the capability and capacity to build another model,” Buttner told News Limited. “We want to shore up our volume to make sure we can stay [manufacturing in Australia]. We’ve appraised the government of the plans we have in place to make our manufacturing plant continue.”
Despite the strong dollar sucking the profitability out of Australia’s biggest automotive foreign trade, with no currency relief on the horizon, Toyota says it is trying to improve its economies of scale by increasing output at Altona from its recent low of 94,000 cars per year, and back up to almost 150,000 a year, which it last recorded in 2007. By comparison, Ford made 37,000 cars last year and Holden made about 85,000.
Toyota made critical changes to its Altona production line when it introduced the new Camry late last year that would enable a third model to be built there. But the new car most likely wouldn’t be added until 2018, when the Camry and Aurion are due for a model changeover.
News Limited understands Toyota Australia looked at building the Kluger SUV and HiLux utility locally, but both options have already been ruled out.
Toyota could build the Corolla in Australia after ending local production in 1999, but it would not make enough profit from the sales of the budget-priced small car. This leaves a compact SUV as a likely candidate, but Toyota is not giving away any clues.
“We’ve got open eyes in terms of what we can build here,” Buttner said. “It would have to be something where we could get volume and have some export potential.”
Buttner would not confirm if the $3500 loss for every Camry exported over the past three years was accurate. “It’s irrelevant. Our job is to manage whatever it is. Every day we have to find a better way to do what we do.”
Despite the unfavourable exchange rates, Buttner said: “We are 100 per cent committed to local manufacturing [despite] the challenges that our business is facing. We were the second location outside Japan to build [Toyota] cars. We were the first location outside Japan to build [Toyota] engines. We’ve had a long relationship. We’ve always expressed a strong desire to continue [manufacturing in Australia].
“Currency, when you’re a significant exporter like us, is a key determinant in your overall level of profitability. We can’t change the currency environment, it’s a floating exchange rate, and it will move subject to the vagaries of the economy," Buttner said. "We’ve operated in that environment as a manufacturer for 50 years and as a sales company for 53 years. So I think we’ve shown some intestinal fortitude to survive for that amount of time.”
He said Toyota Australia tried to fund its own investment in future models before approaching governments for support.
“We don’t go cap in hand in the first instance,” Buttner said. “We take the approach, ‘what are we going do to help ourselves and how can we demonstrate that we can be competitive as a manufacturer in the Asia-Pacific region’. Then we need to ask for investment from our parent company.
“Then, naturally, you need to have a discussion with the government. There is no advanced economy in the world with automotive manufacturing – and there are 29 of those around the world – where there is not some form of support from the government."
Last year Toyota cut 350 jobs from its blue-collar workforce at Altona – to about 3000 employees – due to falling export demand. But the company says it has no plans to make any further job cuts this year.
This reporter is on Twitter: @JoshuaDowling