The Rise of Toyota Tacoma in America Regions

July 4, 2024 (3 weeks ago)

Introduction to American Pickup Trucks

F-150, Silverado, Sierra, Ram, All American, big, capable, and extremely popular. These are not only some of the best-selling trucks in America, they are also some of the best-selling vehicles of any kind in the country. Pickup trucks are perhaps one of Detroit’s last strongholds in the US car market. In 2023, American brands sold nearly 2.4 million pickup trucks, making up more than 15% of all new car sales.

Toyota’s Dominance in the Midsize Segment

But in one segment, Japanese Toyota outshines American names. In fact, it outsells all of its rivals combined. British grown up with it, and you kind of smile when you see it in a. Country obsessed with ever larger vehicles. Toyota never stopped betting there would be a buyer who preferred a smaller truck that would do what they needed. Through the years, it has also earned a strong reputation in desert racing and become a favorite of off-roaders and Overlanders. That’s just world domination. That’s what we’re going in. I’m kidding. Uh, in all, seriously, uh, we consider ourselves very privileged, and we don’t we don’t take it lightly that the success that we’ve had within the segment, that’s largely due to the loyalty that we had from our customer base.

The Profitability and Appeal of Pickup Trucks

Pickup trucks are not only popular, but profitable and are thus a tantalizing opportunity for cash-hungry EV startups. Legacy automakers, especially the Detroit Three, have pushed more aggressively into smaller trucks as foreign automakers take the lead in other segments. Industry forecasters expect there will soon be twice as many truck models competing for the same share of buyers.

Toyota’s Strategy and Market Position

So how did Toyota win this market and is it at risk of losing its lead? There are four main pickup size segments compact, midsize, full size, and Heavy Duty and Detroit rules, nearly all of them. The biggest sellers are the full-size segment. Ford, GM, and Stellantis dominate, but Toyota is king of the midsize. The Tacoma is the ninth best-selling vehicle in the US, holding nearly four times the share of its next biggest competitor.

Consistency: The Key to Tacoma’s Success

When asking industry insiders, even people at Toyota, what accounts for Tacoma’s success? One word keeps popping up: consistency. We got into this segment listening to truck buyers, what they wanted, and we kept giving it to them. It’s been incredibly consistent for a long, long time. Back when a lot of the competition left the market, stayed the course, and I think we built a lot of reputational rapport with our customers.

Historical Context of Toyota Trucks

Toyota built its first truck, the G1, in 1935. It began importing trucks to the US in the 1960s, and, along with Japanese brands like Datsun and Nissan, carved a popular niche in the compact segment. Smaller trucks had been around before that. As early as the mid-1910s, Americans were buying Ford Model T roadsters or chassis and putting aftermarket truck beds on the back. The modification’s popularity led Ford to introduce an official factory-built version of the Roadster pickup in 1925. Several more followed.

Evolution of American and Japanese Trucks

A lot of these early trucks would have qualified as compact pickups, but American trucks grew over time as vehicles tend to in response to customer demands, and by the latter half of the 20th century, importers looking to gain a foothold in the US saw small pickups as a way in. And we found that to be a stronghold for us because a lot of people didn’t want either couldn’t afford or didn’t want that big of a truck, especially depending on where you lived, like in California, you know, you have smaller parking garages. At that time, American firms did somewhat serve the niche. The Chevrolet El Camino and Ford Ranchero could be considered examples, though they were really cars with beds on them.

Competition and Market Adaptation

It is telling that when some of these Japanese imports took off in the 1970s, the main competitors developed by American companies were rebadged versions of Japanese trucks. Homegrown American rivals followed. The original Ford Ranger and Chevrolet S-10 came out in 1983. Dodge followed in 1986 with the Dakota, and our competitors throughout time have jumped in and out of the segment. Our market share, um, I think over the last ten years, our average share has been almost 43%, 43% of a market share of anything. That’s pretty unbelievable.

The Tacoma’s Unique Position

Why? Because we were always there and we don’t jump in and out of things because we’re there and consistently giving the consumer what they’re asking for. Even today, there are more choices. But no line is as comprehensive as Tacoma. It’s the only one you can buy with a long bed, only one of two that comes with two doors. Also one of only two that comes with a manual transmission. Toyota’s really the only one that still serves the entire market. So consistency is one ingredient.

Meeting Market Demands

But the other bit of genius is recognizing that there is a large market of buyers who would love to have some of what a pickup offers, but don’t need all of it. I think that a mid-size truck shopper is in a very different mindset than a full-size truck shopper. If you are really concerned with hauling a heavy payload, if you are really concerned with towing a high figure, then you’re going to be looking at full-size trucks. There’s no point in building the midsize truck with the highest towing rating. Those people are just going to buy a full-size truck anyway. Midsize truck shoppers are trying to solve a very practical problem. And when you add Toyota quality, the sort of reputation they have for long-term reliability to, you know, a comfortable truck that’s good on the road that meets that need. It’s just really hard to beat.

Toyota’s Reputation for Quality

The other thing that served Toyota well was its stellar reputation for SR quality, durability, and reliability. Consumer Reports places Toyota at number two on its list of most reliable brands. Number one Lexus, which is also owned by Toyota, another major analytics company, J.D. Power, has the brand up top as well. Toyota’s reputation for SRX shows up in the used marketplace. Several models are among the best at holding their value, topped by Tacoma second on the list. We sort of staked our reputation to that, and that’s foundational to what is so important to the Tacoma is the fact that when we provide those types of qualities, you know, you get the benefits of residual value, you get the benefits of repeat customers. And I’ll say lifelong customers, if you will.

The Appeal of the Tacoma

Dependability is not the only strength supporters cite. Toyota has been known for making boring cars. Even its chairman and former CEO Akio Toyoda has said so. Tacoma, though, might be a rare exception. A joke about a lot of SUVs and more than a few pickups is that the only hills they will ever climb are the speed bumps in the shopping mall parking lot. But 42% of Tacoma owners say they take their trucks off-road at least once a month. Active outdoor adventure. We heard that over and over and over again. The Japanese automaker has a long history with off-road racing and is especially known for its relationship with Ivan Ironman Stewart. The newest Tacoma takes design cues from this racing heritage.

TRD and the Off-Road Legacy

Calty, Toyota’s US design office, which develops products for the American market, said it wanted the latest Tacoma to be a badass adventure truck. We always want to make sure it’s a it’s a tough, rugged truck. The brand has leveraged this racing heritage into its products in other ways. A lot of automakers have high-performance lines or in-house tuning shops. BMW has M division, Mercedes AMG, Hyundai N line. Ford has performance. Toyota’s first such line in America was TRD Toyota Racing Development, and for a long time it was somewhat unusual in that it primarily focused on off-road racing. A few of the versions of Tacoma that are available and that have been for quite some time, are TRD badged.

Catering to Diverse Consumer Needs

At the same time when more than 40% of your customers are off-roaders, close to 60% are not. Tacoma’s eight trim levels prove the point. Several are off-road focused, but there is also a base model. The SR5 engineer Sheldon Brown calls the jack of all trades a more on-road focused TRD sport version and the higher-end limited. Historically, we haven’t sold a lot of those trucks, and maybe that was because, you know, we really didn’t do enough to differentiate it. So we really tried to make that sort of, I’ll say, the gentleman’s off-roader, for lack of a better word, but more of the amenities that you would get in a full-size truck.

Balancing Technology and Tradition

They haven’t chased refinement as much, and they haven’t chased technology as much. And it’s worked out in two areas. One is that the consistency of the brand. And the other thing is it’s more in the scope of pickup trucks and where you’re going to spend money. It’s a little bit more entry-level truck versus a full-size truck and truck buyers up until the last couple of years were hesitant on technology, and truck buyers weren’t necessarily demanding cameras. Now they are. But that wasn’t the case 6 or 7 years ago. Some features found on Tacoma’s today, such as crawl control, which helps navigate dicey off-road driving, were a lot cruder in earlier versions when compared with competitors like the Ford Ranger. Later iterations were polished up in response to the

threat.

The Tacoma’s Core Strengths

Tacoma doesn’t necessarily lead by having the latest and most perfect forms of every piece of technology. Tacoma leads by being capable, by being reliable, by being what its owners know it to be, and by making sure that it still has that connection. But Toyota no longer has the pool to itself. Even though sales have risen in raw numbers, share has declined simply because there are more trucks in the space. The interesting part about the midsize segment is, as we’ve seen the new entries come in, you know, market share has changed because of, you know, the total number of entries in there, but actual absolute value in terms of numbers has continued to grow because that market has just expanded.

Future Market Challenges

Where I look at the segment and I wonder a bit about what we think is happening in the future, is, is I’m not sure how much more growth there is. The pickup truck segment’s share of the new car market has historically peaked at about 20%. To really go above that and sustain that would not necessarily be impossible, but it would be quite surprising. I think at the end of the day, while pickup trucks are attractive and people like them, they have an open bed. And just honestly, not everybody wants an open bed. It’s unclear how long Toyota can maintain its dominance in this segment. It seems to have held off competition from the Chevrolet Colorado, which has lost market share since 2019. But the Colorado did win Motortrend’s truck of the year award for 2024. Of course, the newest generation Tacoma was not yet available at the time.

Uncertain Future and Electrification

Are they going to stay around? I mean, that’s a question. If they’re going to stay around, they were in before, then they left and now they’re back in and maybe they’ll leave again. I think the consumers are like, I don’t know if I can really trust that the other brands are actually going to stay in the segment. They’ve already left me once. Then there is, of course, the big question on everyone’s mind what do you do with electrification? Toyota just created a hybrid Tacoma and that will get them through to a certain point. But you know, the new EPA tailpipe regulations making about 56% of its lineup electric, and nobody has built a convincing electric truck that sells in large numbers. Yet plenty are trying.

The Rise of Electric Trucks

EV startup Rivian makes nothing but SUVs and pickup trucks. Tesla has begun selling the Cybertruck. VW plans to resurrect the Scout brand, entirely focused on electric SUVs and pickup trucks. Legacy players without much of a presence in trucks have been trying to find a path of least resistance. Hyundai started selling a compact unibody pickup called the Santa Cruz not an EV, but the Korean automaker, along with sister brand Kia, is betting big on electric vehicles. Not to be outdone, Ford released a compact pickup called the Maverick, which comes with a hybrid powertrain at any trim level. GM is planning a compact as well.

The Competitive Landscape

It remains to be seen if any of these can compete in a big way with the Tacoma. That’s a lot of competition for a segment that probably doesn’t have a lot of growth. So we. Really as those players come in, I think over time it’s a matter of eating somebody else’s share, which it always is to some degree or another. It’s heating up. It’s getting more competitive. Ford really proved a point with the Maverick, and I think you may see them make more of an effort next time around.

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