Toyota's Tundra Shows Some Pickup

By JOHN O’DELL

July 30, 1999 12 AM PT

TIMES STAFF WRITER

Toyota’s new full-size Tundra pickup truck has a big engine, four doors and record first-month sales. But an important question remains: Does it have legs?

Officials at Toyota, the best-selling import brand in the nation, certainly think so. And they’ve got a lot riding on its long-term success.

Tundra “is extremely important for us,” said James Press, executive vice president of Toyota Motor Sales of America Inc., the company’s sales and distribution arm.

Tundra is Toyota’s admission ticket to one of the biggest games in town: the full-size pickup market, dominated by Ford, Dodge, Chevy and GMC. Sales of their big V-6, V-8 and diesel-powered pickups have nearly doubled since 1995 and most industry watchers say a lot of growth potential remains.

Toyota’s U.S. unit is spending an estimated $40 million on the Tundra launch, more than on any other vehicle in its history. In the 16 months before Tundra’s June launch, Toyota mailed thousands of brochures and videos pitching the vehicle and took it to 80 county fairs.

It was rewarded with the best first month of any Toyota product: 8,011 retail Tundra sales. The total should top 16,000 when July figures are released early next week.

Besides splurging on advertising, the car maker spent $1.2 billion to build a factory in Indiana dedicated to the Tundra and a new full-size sport-utility vehicle based on the same platform that will follow.

The Indiana plant has a dual purpose. By making the vehicles in the U.S., Toyota can avoid a 25% import tariff imposed on full-size pickups--a levy that has kept importers out of the segment. And it enables Toyota to out-domestic the domestics by advertising Tundra as the only full-size truck line produced entirely in the United States. The domestic manufacturers have truck plants in Canada and Mexico as well as in this country.

“It was a very savvy move, from both financial and marketing points of view,” says David Littmann, chief economist and auto industry specialist at Comerica Bank in Detroit.

Toyota, which rides into the fray with a reputation for quality, can also wave the flag to help win over hard-core domestic buyers, Littmann said.

Still, breaking the Big Three’s stranglehold on the full-size pickup market won’t be easy. The denizens of Detroit aren’t likely to watch passively as Toyota challenges them in the only light-vehicle segment in which the U.S. auto industry has had no competition. Full-size trucks generally return about 20% more profit than passenger cars, according to marketing specialist J.D. Power & Associates.

Toyota plans to produce 100,000 Tundras in its first year, enough to meet anticipated demand and give Toyota about 5% of the full-size-pickup market.

Toyota is capable of producing more Tundras. Analysts say it could add new shifts in Indiana or reduce planned production of the Tundra-based SUV. But to sell more Tundras, the auto maker must first broaden its base well beyond the Toyota loyalists who have accounted for an estimated 65% of the truck’s initial sales.

Ads from longtime Toyota agency Saatchi & Saatchi-Los Angeles gently zing domestic trucks in television commercials for Tundra. One spot shows a V-8-powered Tundra towing a large ski boat and passing other full-size pickups--one from each of its competitors--as it zips up a mountain road.

Another underscores Toyota’s claim that its new truck has the most power in its class by staging a drag race between a Tundra and a Lotus sports car. The underlying message: There are no other full-size pickups that can run with the Toyota. And while the Lotus does surge ahead of the Tundra on the asphalt, the pickup sprints into the lead when the track suddenly turns into a bumpy dirt road and the low-slung sports car spins out of the picture.

The campaign heavily uses television but includes print ads in newspapers and about 30 enthusiast and specialty magazines.

The ads are aimed at the 60% of full-size pickup buyers who use them as alternatives to sedans, not for rugged chores, said Wes Brown, an industry analyst at Nextrend in Thousand Oaks.

“They’re not playing up the commercial aspects, not showing a bunch of guys in work clothes tossing lumber and other stuff into the [truck] bed,” Brown said. “That’s smart.”

But owners of big pickups are among the most brand-loyal in the auto world, analysts say.

“It’s probably a 70% to 75% loyalty rate--more than for luxury cars,” says Thad Malish, senior consultant at J.D. Power. “My sense is that this is a product that will appeal to people who haven’t purchased a full-size pickup in the past. It’ll be hard, though, for Toyota to move people out of their Ford F-150s.”

Ford Motor Co.’s F-series trucks are the best-selling vehicles in the country.

Nonetheless, drawing truck people into Toyota showrooms is exactly what the auto maker intends to do with Tundra. And there is some precedent: Toyota holds 16% of the compact pickup market. Its Tacoma outsold Dodge’s Dakota in 1996, ’97 and ’98 to make Toyota No. 3 in the Big Three of the compact pickup universe, behind Ford and General Motors Corp.’s Chevrolet.

This isn’t Toyota’s first foray into the full-size market. In a rare mistake, Toyota misjudged the market in 1993 with its first full-size pickup, the T-100. Despite its size, buyers shunned the vehicle because its engine lacked the power of domestic full-size trucks. Toyota dropped the T-100 last year.

The Tundra finally gives buyers of full-size pickups a powerful Toyota vehicle to move up to.

The Times’ advertising and marketing news staff can be reached at adbiz@latimes.com or (213) 237-3341.

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Keep on Truckin’

Toyota wants to sell 100,000 of its new full-size Tundra pickups in the first year. It is entering a market that has been the exclusive territory of the domestic auto makers and faces a tough fight to win market share. It sold 8,011 trucks in its first month. Here is a look at sales figures for its competition:

The new contender: Toyota Tundra

Top trucks:

Ford F-150

Chevrolet Silverado

Dodge Ram

GMC Sierra

First-half sales: 1998 and 1999

Ford F-series

1998: 403,040

1999: 449,951

Chevy Silverado/CK

1998: 308,156