Interesting thoughts from Toyota regarding the 250 in this week’s Automotive News

[Jetboy]

There's no reason a person can't continue to own one. But for most everyone else there's better options out there.

Obviously that ship sailed long ago, in this modern world we're just not going to get a simple, naturally aspirated, underpowered, 4cyl from anyone.
While that may satisfy a few niche users that's not what most would want. It's a different world, engine tech has progressed so far we (the collective "we") expect way more power and performance from a small 4cyl, especially when coupled with an electric motor.. While the 22R is a true legend, it just doesn't compare to what can be made now.
Hardly anyone want's their truck's performance to have more in common with a tractor than a modern vehicle.

While I "miss" my '85 4Runner and often wish I hadn't sold her Every once and a while when passing a big rig going up a pass I remember the not so good parts. Crawling up the pass in 3rd going 45mph, getting passed by or being an obstacle to the big rigs. I surely don't miss that and couldn't see myself going back.

Sure if I had all the money and space to keep multiple vehicles it'd be nice to have an old 4cyl Toy with a Marlin that could crawl anywhere. For me RN I want my 4X4 to be my daily driver, to get me over the pass or out to the desert in a timely manner AND be able to wheel when I get there. I have pretty much all of that with my '80 but I want good mileage too now.

The 22r isn't a very good engine by today's standards. I've had a bunch of them. They're low power, inefficient, and have poor reliability by today's standards. A typical 22R would rarely exceed 200k miles without engine work. Usually at a minimum you'd be replacing head gaskets, dealing with oil leaks from the chain case and/or oil pan, and be replacing timing chain/guides by 200k. A 1GR laughs at 200k. For a 1GR, probably 99 out of 100 will get to 200k with one set of spark plugs and 20 oil changes. I fully expect that the next gen engines will be comparable.

The 22r was great for its era because other engines were only lasting 100k miles of service life. It is not by moderns standards. It would be hard to find any current engine that is less reliable.

 

[stonepa]

I'm in Alaska right now. Dealers here that I drive by on my way to work are using overflow parking in nearby lots with trucks. All the domestic brands. Toyota has very little though.

The info from August shows Ford at 106 days of inventory, GM at 97 days, and Toyota at 13 in Alaska. Ram looks like about 120. Nationwide - Ford is 97 days, Toyota 42, and GM is 61. Honda is still very low at 32 days. Average historically is about 60 days. Domestics are still well in excess of average. And the discounts are pretty big on some of them. On the other extreme, Subaru is only at 11 days inventory, Kia is 17, Honda is 22.

What's not obvious from the days inventory is that it's skewed by the longer time to sell. So, days of inventory is up, but actual inventory is still way down. Across the industry there was typically about 2 million new cars in inventory nationwide and now there's more like 1 million. The high days in inventory seems to suggest to me that the sales have fallen off a cliff. Probably due to high price inflation and high interest rates. Used inventory at new brand dealerships is about the same as it always was.

As an example Toyota pre-covid usually had around 150k new cars on lots nation wide. Now they're about 50k. Subaru only has about 7k vs a normal inventory of 60-70k. Ford was normally sitting on 400k in inventory and now is about 130k.

Overall - the story I see from this is that sales are tanking more than inventory is catching up. But what I see with my eyes locally is a pile of trucks overflowing lots.

Ok - Alaska. I would agree with Alaska. heck, when I went by Kendall Lexus a couple of weeks ago they had atleast 4 LX600s in stock, not spoken for or sold, and ready for delivery. The dealer called me multiple times but I think they may have sold them all by now.

My statement was for down here in Seattle. i was in Portland last week and the situation was the same as I described.

 

[SilverKast]

Impossible to get an LX600 here in Alberta, they still want huge markups if they happen to have one too. Lexus, Toyota, Honda, Subaru all have very little inventory. Ford, GM and Dodge lots are overflowing though with every model except Corvettes it seems. Pretty annoying for our work trucks as we usually get Tundras but the allocations dealers are getting are a lot of the higher end expensive models.

I've been promised a LC250 and GX550, but am grabbing an NX in the meantime so I have something to drive around in at least. Not holding my breath on the LC or GX either as the dealers are already complaining about low allocations - it near impossible to get a Sequoia anywhere I've seen here.

 

[NTTD]

Domestics are still well in excess of average. And the discounts are pretty big on some of them.

Not around here (or this region) at least not on what people want. Yeah they'll take a couple/few thou of an already inflated price high-option truck, I'f you're willing to pay over 80K after the "discount".

They're low power, inefficient, and have poor reliability by today's standards. A typical 22R would rarely exceed 200k miles without engine work. Usually at a minimum you'd be replacing head gaskets, dealing with oil leaks from the chain case

I remember my chain was loose, ate through the case. Found out the hard way what an interference engine was.

 

[Hiluxforever]

The 22r isn't a very good engine by today's standards. I've had a bunch of them. They're low power, inefficient, and have poor reliability by today's standards. A typical 22R would rarely exceed 200k miles without engine work. Usually at a minimum you'd be replacing head gaskets, dealing with oil leaks from the chain case and/or oil pan, and be replacing timing chain/guides by 200k. A 1GR laughs at 200k. For a 1GR, probably 99 out of 100 will get to 200k with one set of spark plugs and 20 oil changes. I fully expect that the next gen engines will be comparable.

The 22r was great for its era because other engines were only lasting 100k miles of service life. It is not by moderns standards. It would be hard to find any current engine that is less reliable.

This is why I will never own another one. I would go with a first gen tacoma in a heart beat
The 2/3RZ fixed almost all of those issues and added a cam for good measure. 142/160 hp/tq for the 2RX was reasonable for a 2.4l NA engine from 25 years ago with mild
Compression and a low red line. Could have used a lighter flywheel, though, was a bitch to get it to hook up

 

[Jetboy]

The 22R is also about 350lbs. A GR is roughly the same weight. Not sure what the new 4cyl weighs, but it's probably less.

 

[Hiluxforever]

The 22R is also about 350lbs. A GR is roughly the same weight. Not sure what the new 4cyl weighs, but it's probably less.

Yeah the 2/3Rz still used the High nickel content iron blocks, why folks boosted them to the moon.

 

[m4hk33]

A 3d row would be completely acceptable to me in a hybrid if if doesn't fold into the floor. There's no reason it needs to. Just make it easily removed and the problem is solved. Sell it as an aftermarket product and just have the hard points for installation in all of them. Then anyone who wants to add the 3rd row can go spend $1500 or whatever it costs at a dealer to buy it just like any other accessory.

I'd much prefer better battery packaging. There's a few places that a small 1.8kwh battery can be re-configured to fit. Easiest of which would be to move the spare tire to the rear door and put it underneath where the spare is. I think 99% of buyers would choose that over the current configuration. In the trucks and Sequoia models there's plenty of room to put it under the body between frame rails. Or - put it under the middle row. Just like the Tundra. Or even under the front seats. Lots of dead space there too.

View attachment 3447961

Any of those locations would make so much more sense.

The only reason that I prefer larger vehicles is because of the cargo areas. Guns, Ammo, power tools, bags of dirt, dogs, the wifes junk that bi-annually needs to be culled to go to the dump or goodwill. People dont go in the cargo area, cargo goes in the cargo area, If you need to move people rather than cargo, mini vans offer a far better solution.

I think LC's elevated but flat surface combined with a removable 3rd row is an acceptable approach to the issue.

 

[NTTD]

FWIW - I think there's a good chance Toyota is intentionally withholding production to maintain high margins. Occam's razor. The two alternative explanations are

I see a common thread of a fundamental misunderstanding of how retail works. Manufacturers sell at WHOLESALE to dealers which are RETAIL.

Manufacturers don't see an extra penny when the dealers mark up vehicles. Again dealers are not "Toyota", they are independent but contracted to be the retail face.

Toyota doesn't "win" when supply is low and markup is high, the opposite is true. In order to recoup the millions they've spent in R&D for a model, and the cost of manufacturing an assembly line, they need to sell at scale to recoup this cost. It takes selling quite a few models before these fixed costs are paid for. When you add on the cost of the supplies to to make each vehicle it can take some time to get to a net positive on a model.

 

[desmocruiser]

I see a common thread of a fundamental misunderstanding of how retail works. Manufacturers sell at WHOLESALE to dealers which are RETAIL.

Manufacturers don't see an extra penny when the dealers mark up vehicles. Again dealers are not "Toyota", they are independent but contracted to be the retail face.

Toyota doesn't "win" when supply is low and markup is high, the opposite is true. In order to recoup the millions they've spent in R&D for a model, and the cost of manufacturing an assembly line, they need to sell at scale to recoup this cost. It takes selling quite a few models before these fixed costs are paid for. When you add on the cost of the supplies to to make each vehicle it can take some time to get to a net positive on a model.

All good observations!

Automobile manufacturers do benefit when supply meets demand or supply is slightly less due to low or no incentives being placed on vehicles to sell them at retail levels. Incentive dollars per unit is a significant measure when evaluating manufacturers profitability, the health of the industry, and very low incentive spend was one of the drivers of record profits by automotive manufacturers these past few years.

 

[Jetboy]

I see a common thread of a fundamental misunderstanding of how retail works. Manufacturers sell at WHOLESALE to dealers which are RETAIL.

Manufacturers don't see an extra penny when the dealers mark up vehicles. Again dealers are not "Toyota", they are independent but contracted to be the retail face.

Toyota doesn't "win" when supply is low and markup is high, the opposite is true. In order to recoup the millions they've spent in R&D for a model, and the cost of manufacturing an assembly line, they need to sell at scale to recoup this cost. It takes selling quite a few models before these fixed costs are paid for. When you add on the cost of the supplies to to make each vehicle it can take some time to get to a net positive on a model.

Wholesale and retail price are interdependent. Toyota has been able to increase it's margins by increasing the invoice prices as part of the increase in MSRP and has not needed to offer incentives. Incentives pre-covid averaged around $5k per vehicle at Lexus and $2,200 at Toyota. Lexus is now around $1k and Toyota is $750. If Toyota's average profit per vehicle was $1200 before and they can cut $1000 in incentives - that translates to big profit increases. And that's why Toyota's profits are way up. 78% year over year. Toyota's sales are down, revenue is up, profits are nearly double.

Toyota looks like it does "win" when supply is low and margins are high. The results tell a pretty clear story.

What I think is not known yet is whether the unusually high profits are sustainable in a competitive market. My guess is that they are not. Toyota customers are buying other brands. The declining market share eventually catches up .

 

[Phillyd2]

MSRP stands for manufacturer's suggested retail price. Key word is suggested. Dealers pay manufacturers Invoice price which varies but from what I remember is usually around 15-20% less than MSRP. Then there is the Holdback Price which is an incentive the manufacturers pay the dealers after the vehicle is sold. I doubt there's much of that lately as nobody needs much incentive to move vehicles.

Seems to me that the main numbers car makers really care about and effects their profitability are Invoice & Holdback. Anything above goes into the Dealer’s pocket. If there is a Holdback then a Dealer can sell at Invoice and still make some profit.

If a Dealer sells at MSRP or adds a ADM and can still sell because of market demand then that goes to the Dealer, not the Manufacturers. The only reason those like Toyota may be against ADM is because of market perception and consumer annoyance, which may hurt the brand if it’s believed that they are behind and profit from it - otherwise is have nothing to do with their margins or bottom line.

 

[Jetboy]

Toyota (and every other mfg) closely follow transaction prices and adjust wholesale prices accordingly. The transaction revenue is split between the mfg and dealer. Mfg objective is to take as much of the revenue from the transaction as possible. ADMs are an excess profit to the dealer that the mfg will ultimately adjust to take. The mfg has almost all the negotiating power in this because it sets the prices to a captive and highly inelastic customer set. In one individual car transaction the ADM only benefits the dealer. In the ongoing business of selling cars, the supply scarcity driven price increases are almost entirely captured by the manufacturer.

 

[Phillyd2]

Toyota (and every other mfg) closely follow transaction prices and adjust wholesale prices accordingly. The transaction revenue is split between the mfg and dealer. Mfg objective is to take as much of the revenue from the transaction as possible. ADMs are an excess profit to the dealer that the mfg will ultimately adjust to take. The mfg has almost all the negotiating power in this because it sets the prices to a captive and highly inelastic customer set. In one individual car transaction the ADM only benefits the dealer. In the ongoing business of selling cars, the supply scarcity driven price increases are almost entirely captured by the manufacturer.

Nothing wrong with having an opinion, right or wrong, but when making such declarations it's not unreasonable to ask to show your work.

How does an above Invoice sale dollar move from the Dealer to the Manufacturer?

Those like Toyota (as every manufacturer does these days regardless of product) may increase their Invoice prices because of supply and demand but that's a different issue. And one that ignores the cost side of their business.

 

[desmocruiser]

Toyota (and every other mfg) closely follow transaction prices and adjust wholesale prices accordingly. The transaction revenue is split between the mfg and dealer. Mfg objective is to take as much of the revenue from the transaction as possible. ADMs are an excess profit to the dealer that the mfg will ultimately adjust to take. The mfg has almost all the negotiating power in this because it sets the prices to a captive and highly inelastic customer set. In one individual car transaction the ADM only benefits the dealer. In the ongoing business of selling cars, the supply scarcity driven price increases are almost entirely captured by the manufacturer.

I am not sure where you are getting this information, however in automotive industry this is not correct.

Invoice and MSRP are established and remain in place typically the entire year (there are occasional changes but aren’t frequent and are usually content or hard cost based and have a corresponding change in MSRP) regardless of transaction price. Yes there have been historical cases manufacturers have reduced margins and given dealers assistance in other areas, however most of those have been to better itemize and reimburse costs associated with marketing, inventoring, etc. at a 1:1 ratio.

Manufacturers use incentives to essentially lower the cost to the dealer when sold if a product is not selling. If you read a few of the other posts they mention incentives per unit which is a metric followed closely by the industry. With the current and couple years previous low days supply, manufacturers are placing very few incentives on vehicles to help sell them, therefore increasing their margins and have kept dealer cost much closer to invoice. The dealer margins are from invoice* (minus any dealer incentives available) to transaction amount.

*Invoice is used as general term to keep things simplified, this thread really needs to die and certainly doesn’t need to begin a discussion regarding other dealer financial payments such as holdback, etc. the public is already confused enough!

 

[Jetboy]

The Seqouia when it was sold here was still outsold by the Patrol and LC200/LX570 by very large margins. However it was still a nice alternative to the big gm trucks and was priced very cheap actually and towards the end of its run here it sold pretty well as an alternative to the big gm trucks.

The Seqouia now is a much nicer vehicle than it was in the past but unfortunately it doesn't seem like it's coming back globally or to the Middle East specifically because they are worried it won't sell as well or it might cannabilse some lc300 sales.

i think it would sell nicely and no one is asking for it to outsell the lc300 here but it would be a solid performer enough to justify it being offered here...but like I said Toyota pulled it out of the market here in 2016.

I think specced properly and priced properly it would end up selling more outside of North America. Maybe it might happen as a last chance run if sales in the US are poor.


The Tundra is going to Australia though as big American trucks are starting to gain some popularity. It will be converted to RHD locally by one of the big companies that does it and I expect it to do very well.
Not offering the Tundra in the Middle East is crazy.
We love big US trucks, a huge loss honestly.

Again my guess is they are afraid it will cannibalise some lc300/lc70 sales

They shouldnt overlap but Toyota seems to think so.


As for the biggest LC market in the Middle East the biggest thing lc200 owners asked for was don't make it bigger please and Toyota responded...maybe abit too well.

The issue is people want more interior volume
without making the body bigger.
It is difficult and actually the Lc300 lost interior space in most areas, not insane amount but it did. So they definitely need to reverse that for the next gen, without changing the body size much.

People here love the LC/LX name and would buy anything Toyota/Lexus sell with that name.
The same applies to the Nissan Patrol. That is going to be a very nice vehicle.

I personally would never consider a Seqouia. Nice vehicle and I respect it but its too big and bulky for my preference and its not a fault of the vehicle as that is its requirement..it is a full size after all.

The lc300 is the perfect size for me.

Even the Nissan Patrol Y62 is a touch too big for my liking body wise.
Alot of lc owners here agree with me but also want abit more interior space without changing the body size.

Me personally I think abit more 2nd row legroom would be welcome.

I am not sure where you are getting this information, however in automotive industry this is not correct.

Invoice and MSRP are established and remain in place typically the entire year (there are occasional changes but aren’t frequent and are usually content or hard cost based and have a corresponding change in MSRP) regardless of transaction price. Yes there have been historical cases manufacturers have reduced margins and given dealers assistance in other areas, however most of those have been to better itemize and reimburse costs associated with marketing, inventoring, etc. at a 1:1 ratio.

Manufacturers use incentives to essentially lower the cost to the dealer when sold if a product is not selling. If you read a few of the other posts they mention incentives per unit which is a metric followed closely by the industry. With the current and couple years previous low days supply, manufacturers are placing very few incentives on vehicles to help sell them, therefore increasing their margins and have kept dealer cost much closer to invoice. The dealer margins are from invoice to transaction amount.

This isn't complicated.

Explain how sales volumes go down and profits go up if the mfg doesn't benefit from higher transaction prices. Where do you think the money comes from?

 

[onemanarmy]

Sounds eerily familiar.

I know people always look back with rose colored glasses, but the 1996-2004 tacoma was the best ever. no new tacoma with screens, turbos, battery packs, 75 ECUs, sensors on top of sensors, no manual, a body styled by a blind kid can be proven to be 'better'

sure, a few MPGs here and there is OK, but won't stand the test of time

 

[Jetboy]

Nothing wrong with having an opinion, right or wrong, but when making such declarations it's not unreasonable to ask to show your work.

How does an above Invoice sale dollar move from the Dealer to the Manufacturer?

Those like Toyota (as every manufacturer does these days regardless of product) may increase their Invoice prices because of supply and demand but that's a different issue. And one that ignores the cost side of their business.

It's dynamic. You're focusing on one sale. I'm looking at a series of sales over time. Two different concepts that are not necessarily scalable.

 

[desmocruiser]

This isn't complicated.

Explain how sales volumes go down and profits go up if the mfg doesn't benefit from higher transaction prices. Where do you think the money comes from?

I did, by having little to no incentives on vehicles to sell them.

Let me provide an example: In 2019 a domestic pick up truck may have had a $5000 dealer incentive and 0% interest to sell the vehicle, in 2023 that incentive may be $500 and no special financing to sell the vehicle now in low supply.

This therefore increased the manufacturers margin by $4500 plus saved the monies used to buy down the rate they were paying the lending market to borrow the money to loan through their captive credit, likely another $2500 minimum. In essence this increased their margin by $7000 per truck sold. Lower volume would have an exponential effect on profitability if they were also selling some vehicles at a loss and they were, each negative margin multiplied by a higher number is more loss that eats into the profitable sales.

Simple business plan for any industry, eliminate loss and increase margins on the remaining!

 

[Jetboy]

I did, by having little to no incentives on vehicles to sell them.

Let me provide an example: In 2019 a domestic pick up truck may have had a $5000 dealer incentive and 0% interest to sell the vehicle, in 2023 that incentive may be $500 and no special financing to sell the vehicle now in low supply.

This therefore increased the manufacturers margin by $4500 plus saved the monies used to buy down the rate they were paying the lending market to borrow the money to loan through their captive credit, likely another $2500 minimum. In essence this increased their margin by $7000 per truck sold. Lower volume would have an exponential effect on profitability if they were also selling some vehicles at a loss and they were, each negative margin multiplied by a higher number is more loss that eats into the profitable sales.

Simple business plan for any industry, eliminate loss and increase margins on the remaining!

In your mind is reducing a discount different in effect from raising the price?