Toyota future rests on export hopes

The survival of Australia’s largest and possibly last remaining car manufacturer, Toyota, is hinging on an unlikely bid to renew an export deal with the Middle East.

While the manufacturing future of Holden remains in doubt -- as secret documents reveal the struggling car-maker would make a loss on new models without taxpayer assistance -- Toyota Australia has revealed it is competing with eight other global Camry factories that can make the same car more cheaply.

Toyota Australia must meet an aggressive cost-saving target of $3800 per car -- about 15 per cent of the manufacturing cost of each vehicle -- before it can retain the Middle East export deal and win approval from Japan to build the next generation 2018 Camry.

If Toyota Australia cannot meet this target, the Middle East region will source the Camry from one of Toyota’s eight other global factories.

"We need a balance of both domestic and export demand," said Toyota Australia executive director of sales and marketing, Tony Cramb, adding the "tipping point" for Toyota Australia’s volume to remain viable as a manufacturer is 80,000 units per year.

Toyota Australia is on track to build 105,000 cars this year but only about 35,000 of those will be sold locally.

Domestic demand for the Camry is down 7 per cent year-to-date and demand for the Aurion V6 sedan built alongside it is down by a massive 24 per cent. "Exports are absolutely critical," said Mr Cramb. "If we can maintain exports, we’re all good."

Toyota Australia says it won’t know until some time next year whether or not it will have made enough savings to secure the 2018 car and the future export deal.

"Exports play a vital part in our balanced business model and we will do everything we can to continue to support our export customers," said a media statement from Toyota Australia Executive Vice President and Chief Operating Officer Dave Buttner.

Mr Buttner said the company was well progressed with a five-year plan to save $3800 in the production cost of each car, or about $400 million each year.  But the next round of cost-savings over the next three years are proving difficult to achieve.

Last month, Toyota Australia announced it was seeking a variation to its current workplace agreement -- to cut factory worker bonuses and overtime -- to save $17 million a year.

Toyota has been exporting the Melbourne-made Camry sedan to the Middle East since 1996 and last month reached more than 1 million exports to the region – taking less than half the time it took Holden to export 900,000 vehicles. Toyota Australia’s biggest annual shipment was 97,000 cars in 2008.

The strong Australian dollar means that Toyota loses about $2500 on every Camry exports, according to company insiders.  Toyota Australia would not officially confirm how much money it loses on its current export deal.

Toyota exported 72,899 Camry and Aurion sedans last year and, of those, approximately 97 per cent were sent to the six Gulf Cooperation Council countries, including Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. In addition to the Middle East, Toyota Australia also exports vehicles to New Zealand and the South Pacific Islands.

Toyota Australia’s Altona facility on the outskirts of Melbourne is one of nine factories where the Camry is made, including two in North America and one each in Japan, China, Russia, Thailand, Taiwan and Vietnam.

While Toyota Australia exports about 70 per cent of its production, or more than 70,000 cars each year from its facility in Altona, last year Holden exported just 14,500 cars or 17 per cent of the 84,000 cars it produced locally.

Shaping up and shipping out: Australia’s car exports

Toyota: 1,030,000 from 1986 to September 2013.
Biggest export year: In 2008 Toyota exported 97,153 cars, primarily to the Middle East.

Holden: 907,000 from 1954 to 2012. 
Biggest export year: In 2005 Holden exported 60,500 cars to the US and the Middle East.

Ford: 500,000 from 1962 to August 2013 (estimate based on 57,700 exports from 2003 to 2013).
Biggest export year: In 1991 Ford exported 30,000 Capris to the US.

Mitsubishi: 162,000 from 1980 to 2008.
Biggest export year: In 2002 Mitsubishi exported 25,000 sedans to the US and Canada.

This reporter is on Twitter: @JoshuaDowling