TOYOTATIMES

[Yaris named Europe’s Car of the Year] How Those in Europe View the Win

FROM THE EDITOR 2021.04.22

INDEX

The Yaris was named Car of the Year 2021 in Europe. As a region, Europe is at the forefront of decarbonization efforts, seeking to become carbon-neutral by 2050. Its environmentally-conscious customers have contributed to the rapidly rising share of electrified vehicles.

These conditions have spurred European automakers’ enthusiasm for electrified cars, with much effort being invested in new models, including battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs). The inclusion of BEVs such as Volkswagen's ID.3 and Fiat's 500 among the seven finalists for this year's Car of the Year award represents the high level of expectation toward electrification in Europe.

It was in such circumstances that the hybrid electric vehicle (HEV) Yaris was ultimately selected as the Car of the Year. While the Yaris is equipped with the latest high-efficiency hybrid system, Toyota has been honing the idea for more than two decades, since presenting it in the form of the 1997 first-generation Prius.

The technology is certainly not new. Why is the HEV Yaris now being accepted and appreciated in Europe? To find out how the Yaris and Toyota as a company are viewed in Europe, Toyota Times reporter Kyonosuke Morita spoke with the people involved in the Yaris’s business, production, and sales in the region.

How the Yaris came out on top amid fierce competition

Matthew Harrison, CEO of Toyota Motor Europe

The first person Morita spoke to was Matthew Harrison, CEO of Toyota Motor Europe (TME), who oversees the company’s business activities in Europe. As Toyota’s top executive in Europe, Harrison had spearheaded the Yaris’s launch in Europe. Even so, Harrison says he was surprised to find the Yaris at the top of the Car of the Year list.

Morita:
Congratulations on winning the Car of the Year in Europe.

Harrison:
I was confident that we would be in the top three, but didn’t expect to win. We’re very proud, and pleased that we did win, particularly for all the people who worked so hard on the development of the Yaris both here in Europe and in Japan.

Morita:
You said that you were confident of being in the top three, but you did not expect to win. Why was that?

Harrison:
We thought that the new Fiat 500 and also the VW ID.3 were both very strong BEV competitors, and of course highly supported by journalists from their countries.

Morita:
So the Yaris won against quite fierce competition.

Harrison:
It was a very impressive shortlist of competitors, in terms of strong brands and great models, including BEVs. So for the Yaris to stand out from that shortlist was an incredible result.

As Harrison explained, in order to compete with these rivals, the Yaris team emphasized three areas when presenting to the final jury. First is the fact that hybrid models account for more than eighty percent of Yaris sales. Based purely on CO2 emissions during driving alone, HEVs are no match for BEVs, which of course emit no CO2 at all when running.

However, partly due to driving range concerns, BEV sales remain low in most markets, limiting their positive environmental impact. On the other hand, Yaris was the most popular single model in terms of sales, along with Škoda Octavia, with approximately 200,000 units sold in 2020. And more than eighty percent were HEVs, making a significant contribution to CO2 reduction.

The second point of appeal was the existence of the GR Yaris, which proves that the Yaris is more than just a practical, environmentally-friendly car. Honed through thorough testing on European roads, the car’s driving performance also earned high praise, with the GR Yaris symbolizing this emotional side of the vehicle.

From the outset, this genuine sports car was built to win races in the WRC (World Rally Championship) and other competitions, and Harrison’s team used that outstanding driving experience to promote Toyota's passion for performance.

As a final point, Harrison recalled how President Akio Toyoda had personally poured a great deal of energy into the Yaris. The impassioned message Akio sent to the jury provided a powerful boost towards winning the Car of the Year 2021 in Europe.

The brave decision that led to the award

At this point, a beaming Harrison brought out the Car of the Year trophy for the camera, supporting the rather hefty-looking prize with both hands.

Usually, the Car of the Year award ceremony is held at the Geneva Motor Show. Due to the continuing impact of COVID-19, however, in 2021 the show itself was canceled and the awards ceremony was held online. Harrison attended remotely from Brussels, Belgium, where TME is based. Although he had not been there to accept the award in person, the trophy had just arrived in Brussels and he was keen to “share it with Toyota Times before sending it off to Akio”.

Morita:
Perhaps the trophy’s weight reflects the great efforts of the many people behind it?

Harrison:
I think that’s a great analogy. I know that with this project there was a huge amount of effort to make sure that we developed a car that was the best it could be within the segment.

I think back in 2015 there was a very difficult decision taken, to delay the timing of the next-generation product launch. At the time, that was a very brave decision to make, as the Yaris would have the longest life cycle ever in the segment, and would come with a lot of commercial risk. But in hindsight it was exactly the right decision, resulting in a more competitive car. Ultimately, I think that’s why it won.

The commitment to ‘making ever-better cars’ extended as far as delaying the launch. According to Harrison, the resulting model not only embodies Toyota’s traditional values of durability and high quality, but also attracts younger generations with greater emphasis on product appeal.

When asked whether Toyota’s image in Europe had changed, Harrison’s response was emphatically positive. Although the image of Toyota had been static until around 2015, the change has been dramatic since then, says Harrison. Factors such as the introduction of TNGA platforms, the launch of exciting models such as the C-HR, and the success of hybrid vehicles have all contributed to improving the brand image.

And of course, Toyota’s WRC success has also helped to strengthen the brand. As Harrison emphasized, “This Car of the Year award will only further amplify the good brand image we have built up”.

Harrison:
The Yaris is our best-selling model in Europe, and of course our most produced local model. In the first quarter this year, Yaris also became Europe’s best-selling passenger car. This is the first time ever for a Toyota model, and in fact for a Japanese brand, to hold that title.

Yaris has always had a unique personality and been seen as quite innovative, in addition to having very high safety and, of course, being very accessible and easy to buy. Because of its weight – when people think of Toyota in Europe, they think of Yaris – this award will have so much of an impact in terms of the total brand perception of Toyota.

The Yaris’s 3 strengths

Morita then asked about the Yaris’s ‘three strengths’, on which the Toyota team focused when appealing to the Car of the Year jury. First up: hybrid technology.

Compared to other regions, Europe has been particularly proactive in embracing electrification. Against this background, how is Toyota viewed in Europe? According to Harrison, in Western Europe (excluding countries like Russia and Ukraine), some seventy percent of cars sold by Toyota and Lexus in 2021 were HEVs. In other words, HEVs have come to define Toyota’s unique brand image.

Although diesel cars were once popular in Europe, demand for them is now declining. In their place, BEVs and HEVs have gained presence as Europe’s baseline powertrain. As for HEVs in particular, the technology is already proven and reliable, while selling at the same price level as diesels. With no concerns over the availability of infrastructure or driving range, HEVs have been well received in Europe.

While European brands are focusing efforts on PHEVs and BEVs, Harrison believes that demand for HEVs will continue to be high until the necessary environment, including charging infrastructure, is established, which is unlikely to happen until at least around 2025.

The second strength Harrison raised was the GR Yaris. In Europe, motorsports such as the WRC boast great popularity. Since returning to the WRC in 2017 with the Yaris as its car of choice, Toyota has enjoyed a highly successful run. As Harrison insists, there is “absolutely no question” that the WRC has raised the Yaris’s image. “Nobody could have believed that we could become so competitive so quickly, and so dominant. This success has brought an exciting, dynamic image to the Yaris”.

Overturning the conventional approach, the GR Yaris was born by adapting a WRC race car into a production model. Stocking showrooms with essentially race-ready vehicles had a major impact.

Harrison:
GR Yaris has reached a completely different level. In 21 years at this company, I have never seen a reaction like this, from the media, from the retailers, and from customers. We thought that our target of selling 9,000 units this year in Europe would be a huge task, but we have sold out not just for 2021, but for 2022 as well. Demand for the car is incredible.

Finally, the third point is the presence of Akio. How is the president perceived by the European public? Among the automotive media, Akio is a big personality, says Harrison. He is well recognized as a passionate ‘car guy’, and for his commitment to making ever-better cars.

At the same time, among the business media he is seen as a visionary, a leader who sets a clear direction not just in terms of environmental issues or carbon neutrality, but for future mobility as well.

As the pandemic has raged on for over a year, Akio has also been recognized for his swift leadership, including the fearless way he has set and committed to sales forecasts.

Harrison:
Upon receiving such an award as the 2021 World Car Person of the Year, Akio has increasingly gained recognition in Europe. After 10 years or more at the helm of the company, he’s gaining more and more awareness amongst customers.

And the retailers absolutely love him as well. At an event in Berlin in 2014, he promised them ‘no more boring cars’, and he’s delivered everything that he promised, so they do trust him, hugely.

Toyota has built up its trust and brand image in Europe by earnestly continuing to make efforts as they have lived up to Akio’s aspiration to make ever-better cars. The Yaris’s Car of the Year award is one of the flowers that have bloomed in that fertile soil.

‘Yaris belongs to France’

David Palmer, Vice President in charge of production, Toyota Motor Manufacturing France

Next, Morita delved into the production of the Yaris at Toyota’s French plant. He spoke with David Palmer, Vice President in charge of production at Toyota Motor Manufacturing France (TMMF). For more than twenty years since January 2001, TMMF’s main duty has been to produce the Yaris in Europe. In December 2020, the plant marked the production of a total of four million vehicles.

During the Yaris’s development, Palmer himself was working at Toyota's headquarters in Japan and had been involved in the planning of the model’s entry into Europe. Since joining TMMF three years ago, he has been implementing the plans he himself drew up. This is how Palmer replied when Morita asked whether he was confident about winning the Car of the Year:

Palmer:
Personally, I have driven many miles in the Yaris to really understand the product we make. I knew we had a special car. What I wasn’t sure of was whether the people judging would be able to understand what I felt.

In Europe, a major trend toward electrification is gaining speed. As part of that, the Yaris is equipped with leading hybrid technology, while also offering nimble and highly dynamic driving performance. Palmer sees this as aligning neatly with Europe’s infrastructure conditions and the needs of its customers.

So how do the people of France view the Yaris, which is produced in their country?

Morita:
Looking at the scoring by French judges, the Yaris came out on top. What sort of presence does the Yaris have in France?

Palmer:
I think French people have a strong feeling that Yaris belongs to France. So of course, 20 years ago, when we made the decision to build a Toyota plant in France, there was always the intention to appeal to the European market as a European-made car by being based here.

Even for me, as a British guy, France is the hub of Europe. By being built in France, the Yaris is recognized as a car that’s made in Europe, and I think other European countries also recognize the effort to appeal to European customers.

A major challenge awaits

With the development of the new Yaris complete and production about to start in Europe, Palmer and the French plant were struck by a major challenge – the COVID-19 pandemic. Seemingly overnight, COVID-19 appeared in Europe, with infections spreading rapidly in France. On March 18, 2020, the TMMF plant ceased operations as the country went into lockdown. Palmer recalled the situation at the time:

Palmer:
Initially, there wasn’t a good understanding of COVID-19, and it seemed like an obscure disease that was happening around the world. As we all experienced, this pandemic became more and more of a global affair, and it became apparent that this was a genuine safety issue.

For us, securing the safety of our members is our number one priority, above production, above profit, above everything. TMMF was the first (of the eight plants) in Europe to stop operation. We took a very difficult decision but, on reflection, I think it was absolutely the right decision. We took the brave decision.

The shutdown of TMMF lasted about a month. What ran through Palmer’s mind, and what was he doing, during that time? Having spent the first week working from home along with other employees, Palmer says he returned to the plant in the second week to understand what needed to be done to prepare for restarting.

In normal times, the plant is a busy facility that operates 24 hours a day on a three-shift basis. During the shutdown, however, Palmer found himself completely alone. Switching the plant’s lights on by himself, he sat at his office desk trying to figure out how to get things up and running again. Thanks to his efforts, TMMF was able to resume production before other manufacturers.

Morita:
How were you able to restart the plant so quickly?

Palmer:
I think the enabler was our way of thinking. Rather than rushing to restart production, our way of thinking was, ‘how do we build confidence in our members and in our team’? We worked very hard to prepare, to make sure everybody had masks and hand gel to reduce the risk of infection.

We had members that would normally share a car to come to work, who would be coming in with their own individual cars, so we needed enough parking capacity. We used laser printers to make face shields, devised door handles that didn’t need to be touched by hand, and took many other countermeasures to make a safe production environment.

Door handles that can be opened without hand contact

The pace of production was also increased gradually, rather than launching straight into full operation. Following a one-week trial with a single daily shift, the plant switched to a two-shift system. Eventually, Palmer’s team was able to return to its pre-pandemic three-shift roster. Above all, the top priority was to create an environment where employees could work safely.

Virus protection at TMMF

On the day that the plant finally restarted, Palmer and the entire management team lined up in the parking lot to greet returning employees. They also handed each employee a welcome kit containing masks, hand gel, snacks and drinks. As Palmer recalls, some staff commented that these initiatives, which prioritized employee safety, made them ‘feel safer inside the plant than outside’.

Welcoming employees at the parking, after they return to work.

Thanks to everyone at TMMF working together towards a restart, production of the new Yaris finally began on July 7, 2020.

Mr. Palmer (on the right) with the first car of the 4th generation Yaris.

Karakuri concept thrives in France

Toyota Motor East Japan’s Iwate Plant, which Toyota Times covered recently, is a parent plant to the French facility. The plants communicate with each other as both plants build the same Yaris.

Palmer describes the relationship as one of ‘mutual learning and growth’. TMMF runs a program through which French team leaders spend a month at the Iwate Plant, while Iwate personnel travel in the other direction on visits or long-term assignments.

Of course, the French plant has also adopted Iwate plant’s ‘karakuri’ concept. Karakuri are hand-made mechanisms that improve work processes. Wherever possible, karakuri do not rely on electricity or other power sources; rather than using large machines, they contribute to boosting production efficiency through ingenious solutions to problems.

Palmer:
The karakuri concept is firmly rooted here in France as well. For example, how we sequence brake tubes and fuel tanks, all these simple ideas reduce the amount of time by a few seconds or make the process easier.

Morita:
Is it fair to say that the accumulation of such small kaizen efforts contributed to winning the Car of the Year against fierce competition?

Palmer:
Yes, I think you’re right. Once you get that kaizen mindset, that everything can be improved, there is absolutely no limit. I think that contributes towards making a better product, which put us in a stronger position for the Car of the Year award.

The Greek blood running through the Yaris’s veins

Aris Aravanis, Chairman, Toyota Hellas

For the final interview, Morita spoke with someone who knows a great deal about Toyota’s customers – Aris Aravanis, Chairman & Managing Director of Toyota Hellas, which oversees Toyota dealers in Greece.

In fact, the Yaris’s connection to Greece runs deep. The name Yaris is derived from Charis, one of the goddesses of beauty in Greek mythology. Moreover, the original Yaris was designed by Sotiris Kovos, a Greek designer who still enjoys a strong fanbase. Perhaps the Yaris’s popularity in Greece, which exceeds even that of many other European countries, can be traced back to the Greek blood that runs in its roots.

Morita:
Congratulations on winning the Car of the Year.

Aravanis:
It’s a great achievement for all of us in the Toyota family in Europe, and of course the team in Japan as well.

Morita:
As someone selling the Yaris in Europe, what was your reaction to this achievement?

Aravanis:
The award created a lot of positive feelings for all of us, especially for the people on the front line who sell the Yaris to customers. The feelings were of course pride and happiness. This award has pushed customer’s decision to buy the car, and is also great for boosting demand in the B segment.

In Europe, the B segment (compact cars), to which the Yaris belongs, is fiercely competitive. As the mass-market segment upon which many people rely for their everyday transport, it demands that cars offer a high level of performance in all aspects, including feel, convenience, safety, fuel efficiency, and design. All this must also be achieved at an affordable price. What kind of presence does the Yaris have in this hard-fought B segment?

Aravanis:
I would say that customers love our smartest, safest and most efficient ever Yaris. Its reputation for ‘best in class’ value is really spreading. At the same time, it is highly praised in terms of driving dynamics and engine technology. I can definitely say that the new Yaris speaks to both the customers’ hearts and minds.

Eight years leading the pack in popularity

As Aravanis explained, the Yaris is hugely popular in Greece. Surveys show that one in four to five people who are considering buying a new B segment car would prefer a Yaris. The Yaris has held the position of market leader for eight years, since 2013. Driven by the Yaris’s popularity, other Toyota models have also gained a share of twenty percent or more in the C segment, D segment and SUVs.

Morita:
What is it that Greek people like about Toyota?

Aravanis:
This strong position in the market has been built up over the last 20-25 years, bit by bit. It began with QDR - Quality, Durability, Reliability. I would say gradually building trust, then introducing hybrid technology and attractive models, helped Toyota achieve widespread popularity.

How did people in Greece react to Toyota’s return to WRC competition in 2017? Did this help boost the brand image of Toyota and the Yaris? Aravanis responded to this question without hesitation: “definitely yes”.

As he explains, it is “not only the fact that Toyota came back to racing, but the how and why” that are particularly important. Toyota came back to win races, and in fact won many. The team created a car to push the limits, embodying Toyota’s passion for building ever-better cars. Aravanis believes this attitude resonated with customers, elevating the reputation of the brand and the car.

‘Respect and care’ resonate with Toyota leaders in Greece

Having joined Toyota Hellas in 1991, Aravanis celebrates thirty years with the company this year. In his eyes, what kind of company is Toyota?

Aravanis:
I have seen the company developing in all areas over the years, but always under the same founding principles with a set of strong values. I feel that Toyota not only has fantastic products, but also has good principles, strategies, and vision at its core.

Morita:
What specific principles, strategies, and vision resonate with you?

Aravanis:
First of all, I would say the respect for people. The respect for society, stakeholders, and a sustainable world – I think this is the key foundation for the company. Another is the spirit of reaching out and caring, for people, society, and everything that relates to the customers’ lives. These are things I really appreciate. These two things, respect and care, resonate strongly with me.

Last year, the company set out its ‘Toyota Philosophy’, with the mission of ‘Producing Happiness for All’. Akio himself refers to this mission at every opportunity. Morita felt that the spirit of respect and caring embraced by Aravanis, in some respect, was linked to producing happiness for all. When Morita suggested that Toyota was already achieving this mission in Greece, Aravanis replied with confidence: “the answer, of course, is yes”.

Aravanis:
By making great cars, we are giving the means to the customers to move with their friends and families. This really is providing happiness, and perhaps the joy of driving as well.

Alongside the product of cars, Toyota also provides technology. For example, we contribute to intangible value like air quality thanks to our electrification technology, or help people with disabilities to move freely. So I can say with confidence that the products and services we provide offer our customers a great deal of happiness.

Toyota’s goals for Europe

Morita’s interviews offered him three different perspectives on where the Yaris currently stands in Europe: that of TME, which oversees Toyota’s European business; TMMF, which is responsible for producing the Yaris; and Toyota Hellas, which handles sales in Greece.

Through conversations with the three Toyota leaders, Morita learned of Europe’s high regard for hybrid systems as a practical solution, the positive response to the new Yaris’s driving performance, and the steadily growing presence of both the Yaris and Toyota in the region.

And what about Toyota’s future direction in Europe? TME CEO Matthew Harrison offered five points.

Morita:
Moving forward, what is your aspiration in leading TME?

Harrison:
Maybe I can sum it up in five points. One is growth. Today, we are selling around one million vehicles per year in Europe, in a responsible and sustainable way, in terms of managing CO2 reduction. And we will continue to grow with our expanded product and powertrain portfolio.

Second is transforming our business in response to the electrification trend. To be ready for the second half of the decade with fully electrified vehicles, we must adapt our supply chains and business model. We need to create new revenue streams that can compensate for the ones that we won’t have with fully electrified vehicles. This is a big challenge that we need to work on now, without waiting until 2025.

The third is SDGs. I believe this is an area where we can truly differentiate ourselves, because it is in Toyota’s DNA, ever since the company was founded, to care about our contribution to society, to take a long-term view, and to offer solutions that are right for the customer. I believe that, more than any other European manufacturer, we can use this to increase our engagement with European customers.

The fourth is mobility. We are scaling KINTO in Europe, with five mobility services including car-sharing and subscription. In terms of things like subscription models, I think we can become a benchmark for global Toyota in how we do that.

The final point is diversity, equality, and inclusion. With our geographic and cultural diversity, Europe also has diverse human resources, and we are doing a lot of great work to imbed those principles in our company culture.

By working on these five areas quickly and in the right way, we hope to achieve further growth for Toyota in Europe.

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