What to Expect from Toyota Motor Corporation in 2018
John Rosevear, The Motley Fool
Updated
Toyota Motor Corporation(NYSE: TM) is likely to end 2017 in an unaccustomed spot: third in the global sales rankings, behind the newly expanded alliance of Nissan Motor, Renault SA, and Mitsubishi Motors in first place, and German giant Volkswagen AG in second.
But Toyota CEO Akio Toyoda isn't the type to obsess over his company's global sales ranking. The reality is that Toyota is big enough to compete with anyone, as long as its products remain compelling. Mindful of the need to create products that resonate with customers, Toyoda has focused on bringing more excitement and more emotion to vehicles built by his company, which has historically emphasized quality and value over other considerations.
That approach was clearly visible in 2017. Toyota's midsize Camry sedan, long thought of by many as the epitome of a boring-but-reliable transportation appliance, took a surprisingly sporty direction in its all-new-for-2018 iteration.
Toyoda is shown on an auto-show stage with a silver 2018 Camry sedan.
Toyota CEO Akio Toyoda showed off the all-new 2018 Camry in January. What will he unveil next year? Image source: Toyota Motor Corporation.
The new Camry is still a practical, reliable, value-priced offering, but this Camry is also nimble, with an improved suspension, and even somewhat stylish -- a much more appealing combination than its predecessor offered.
Toyota's hope was that a sleeker and more nimble Camry would draw more buyers in what has been a shrinking market segment. Now that the new model has arrived at U.S. dealers, early signs are that it's paying off: U.S. Camry sales were up 24% in November.
So with that in mind, what's up for Toyota in 2018? In all likelihood, more of the same -- starting with one of Toyota's most important products.
Coming in 2018, an important new Toyota
Toyota is widely expected to reveal an all-new version of its huge-selling RAV4 early in 2018. The RAV4, a compact crossover SUV, has blown past the Camry to become Toyota's best-seller in the U.S., helping to deliver a nice increase in profits. What's the appeal? The RAV4 is a perfect example of Toyota's classic value proposition: a capable vehicle with top-notch reliability at a very competitive price.
A white 2017 Toyota RAV4, a compact SUV, in a desert setting
2018 is likely to bring an all-new version of the huge-selling Toyota RAV4. Image source: Toyota Motor Corporation.
But that doesn't make its future success guaranteed, by any means. The RAV4 competes in a hotly contested segment against stalwarts like Honda's CR-V, Nissan's huge-selling Rogue, and Ford Motor Company's perennially popular Escape. Toyota will want to give the all-new RAV4 a leg up on those rivals -- and I expect it will try to do that by applying the same formula it used with the new Camry.
Expect the new-for-2019 RAV4 to have a more stylish look (or at least a more interesting look), an upgraded interior, and a more nimble-feeling suspension that combine to impress not only comparison shoppers on test drives -- but also jaded reviewers. Toyota will almost certainly offer a hybrid version that draws on the technology introduced in the latest Prius. And it's a safe bet that the all-new RAV4, in both conventional and hybrid configurations, will get better fuel economy than the versions in Toyota showrooms now.
More new Toyota models could debut next year
What else is in store for Toyota in 2018? It's likely that Toyota will follow up the redesigned Camry with all-new versions of its other medium-to-big sedan models, including the large Avalon and the upscale Lexus ES and LS sedans.
We may also see a revamp of the hydrogen-fuel-cell-powered Mirai sedan. While the Mirai's sales have been tiny, Toyota has continued to invest in fuel-cell technology, and the Mirai might be revamped to incorporate some of its latest thinking.
What we probably won't see: Electric cars and self-driving
While some rivals, like General Motors(NYSE: GM), are making aggressive efforts to bring self-driving vehicles to market soon, Toyota has made it clear that it's following its own path.
Toyota is working on two variants of self-driving technology. One, called Chauffeur, is fully self-driving, like the systems under development by its rivals. The other, called Guardian, is a system that uses artificial intelligence to help, rather than replace, a human driver.
A Lexus sedan with visible self-driving sensor hardware parked outside of Toyota's research facility in California
Toyota's self-driving research efforts are thought to be fairly advanced, but a commercial product is probably still a few years away. Image source: Toyota Motor Corporation.
Both are serious, credible efforts, but neither is likely to come to market in 2018. Nor will all-electric Toyotas: While Toyota recently announced a $13 billion electric-vehicle development program and a deal with Panasonic to explore the idea of a battery-making joint venture, it's likely that the first battery-electric Toyotas are still a few years away.
The upshot: An incremental year ahead for Toyota
Make no mistake, the all-new RAV4 will be a big deal for Toyota. But it'll be an ordinary big deal: a rethought and incrementally improved iteration of an important product, not a radical move into new technology.
While Toyota might have a high-tech trick or two up its sleeve -- the company has hinted that it's close to commercializing "solid-state" electric-vehicle batteries -- it's not a company that is likely to (or needs to) lead the industry's charge into the future.
Instead, expect Toyota in 2018 to continue to do what it does best: delivering quality and value to its many customers, maybe with a bit of added pizzazz.
John Rosevear owns shares of, and The Motley Fool owns shares of and recommends, Ford. John Rosevear owns shares of General Motors. The Motley Fool has a disclosure policy.
