Toyota Consolidates Tundra Manufacturing, HD Tundra Tabled?
In a very wise move, Toyota has announced that they’re going to consolidate all Tundra production to the San Antonio plant. Currently, Tundras are produced in both San Antonio, Texas and Princeton, Indiana. Originally, before the launch of the 2nd-generation Tundra, Toyota decided to produce the Tundra at a couple of different plants for a few reasons:
- Facilities and convenience. The Princeton plant was the home of the original first-gen Tundra, and a lot of suppliers for the 2nd-gen truck were nearby and accustomed to working with the Princeton, Indiana plant.
- Quality at launch. Toyota wisely determined that launching an all-new truck at an all-new plant might be a quality control issue, so they decided to use the tried-and-true Princeton plant to produce the new truck along with the new San Antonio plant. This reduced the number of variables when it came to quality control and helped Toyota isolate production problems correctly.
- Capacity. This is the main reason – Toyota anticipated they would need all the production capacity they could get for the new Tundra half-ton and upcoming Tundra HD. At full speed, the Princeton plant could build 150k new trucks per year. The San Antonio plant has the capacity to build 250,000 units per year. Obviously, Toyota anticipated producing as many as 400k units between the two plants. Considering the future plans that were being discussed at the time – a diesel HD version of the Tundra as early as 2009, for example – it was determined this capacity was needed.
What this means to you: If you’re waiting for an HD Tundra, you might be waiting a while. The costs of producing a diesel HD Tundra are substantial. Not only are there quite a few R&D costs (such as designing a new big diesel, platform design, etc.), but now there are production concerns too. Since the San Antonio plant has a maximum annual production capacity of 250k units, there’s not a lot of extra capacity to build an HD version of the Tundra.
- Toyota can expect to sell 150k-200k Tundra half-tons per year. This year, it will probably be closer to 150k units, but many industry experts believe (including ourselves) that truck demand is artificially low right now and should bounce back. Some anticipate truck sales volumes will return to “normal” levels as early as 2010, and Toyota will most certainly continue to upgrade the Tundra in order to stay competitive. You can probably figure the new half-ton Tundra diesel and the anticipated 2010 model redesign will attract more buyers to Toyota. In other words, Toyota should be back to selling 200k half-ton Tundras per year in 2 or 3 years.
- In order to justify the expenses associated with developing an HD Tundra Diesel, the industry consensus is that Toyota will need to sell at least 50k HD Tundra units annually (and more likely 75k) just to “break-even.”
- If you assume Toyota sells about 200k half tons plus another 50k-75k H.D. trucks, you’re looking at 250k to 275k units out of the San Antonio plant. Certainly do-able. But what if Toyota’s HD Tundra (or the 2010 re-design) sell above expectations? Toyota’s lack of plant capacity will certainly be an issue.
- Of course, Toyota can always ad capacity to the San Antonio plant, but that’s a pretty bold move to make in this climate. Considering that Toyota’s Mississippi plant (under construction) is no longer going to produce the Highlander, it’s clear that Toyota has decided not to invest in truck or SUV plant capacity for the time being. That makes the prospect of increasing San Antonio production a long shot – at least for the next few years.
Our projection: Toyota tables the HD Tundra Diesel for the time being. Rather than invest in producing a new model for an already crowded segment (3/4 and 1 ton trucks), Toyota will instead focus on consolidating and growing their share of the half-ton market.
Bottom Line: The HD Tundra Diesel, if it’s ever produced, is at least five years out.
Filed Under: Auto News