Toyota Australia could build RAV4

Toyota Australia is closing in on the right to build a third model line alongside the Camry and Aurion at its Altona plant, with an SUV the most likely option.

A final plan is set to be announced within 24 months, Toyota Australia manufacturing executive director Chris Harrod confirmed to motoring.com.au at today’s four-cylinder engine plant opening at Altona.

“Hopefully in the not-too-distant future we will be able to make an announcement on that. We hope to conclude our studies by 2013-1014,” Mr Harrod said.

While Mr Harrod would not say which model line Toyota Australia’s studies had focussed on, an SUV line is known to be the favoured option within the company.

And to hit the sort of volume requirements to build locally, the compact RAV4 would be a logical choice.

The new fourth-generation RAV was revealed to the world at the Los Angeles motor show last week and goes on sale in Australia next February.

Intriguingly, it appears Holden is set to head down the SUV path as it plans a replacement for the Commodore post-2017.

Its declared need to build top-10 sellers locally would almost certainly apply to Toyota also, narrowing its choices dramatically.

“We are studying many options at the moment … but whatever we choose to do has to be profitable for the company,” Mr Harrod said. “By that fact it tends to eliminate some of the options.”

Given the years it takes to go from approval of such a project to vehicles rolling off the assembly line, it is reasonable to estimate Toyota Australia won’t be building a third model line until late this decade.

Toyota Motor Corporation senior managing officer, Seiichi Sudo, at Altona for the engine plant opening, also confirmed to motoring.com.au that investment at Toyota’s Australian manufacturing arm beyond the new engine plant were currently “under investigation”.

Toyota Australia has pursued a third model line since at least 2003. Back then, the mid-size Kluger was the option being pursued, but that vehicle’s production from the next generation will be based in the USA.

Australia’s current Kluger comes from Japan, which will not produce the next generation, and the new model is due to arrive here from the US late next year.

“At this stage we would be proposing to keep Camry and Aurion but look for a third model and that third model would then enable us to get to the volumes we are looking for to be sustainable going forward, which is around 100,000 units per year,” Mr Harrod explained.

Toyota Australia’s 100,000 minimum manufacturing target is roughly what it builds today when local and export volume is combined. The company has made it clear it is seeking a more sustainable local future, having posted a $36.2 million loss in the 2011-12 financial year and retrenched 350 workers this year.

That sustainability focus includes the assembly plant breaking even at 80,000 sales. The cranking up of the new $330 million engine facility also cuts costs compared to importing engines.

Winning the right to the ‘AR’ 2.5-litre engine plant ahead of rival bids showed Toyota Australia’s bid for a third model had a real chance of getting up, Mr Harrod said.

“We won the right to build these engines in Australia over TMC in Japan and TMMK (Toyota Motor Manufacturing Kentucky) in the US, so our cost is lower than those two, even with the high Australian dollar at the moment.

“What you are seeing in this engine plant today is the faith and confidence Toyota Japan has in Australian manufacturing if we can get our performance up to global standards.”

He also said that Toyota Australia’s manufacturing performance had improved markedly since the third model line was first mooted, boosting its chances of winning another vehicle production deal.

“I would say yes, on the basis that the plant performance now is starting to approach more the global levels and for us to secure the investment we are talking about we need to be performing at those sorts of levels. It is fair to say in the past timeframe we weren’t at those levels.”

Mr Harrod would not speculate on the investment required to get a third model line up and rolling at Altona. The most recent addition to Australian manufacturing, the Holden Cruze, was introduced at a cost of about $600 million, including $149 million from the federal government.

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