Why Toyota's new RAV4 is in such high demand
Toyota's new RAV4 is experiencing unprecedented demand, with customers waiting months for delivery and dealers selling through inventory faster than production can supply. The surge is driven by the model's growing popularity and increased demand for hybrid vehicles spurred by rising gas prices.
Summary
The transcript discusses the exceptionally high demand for Toyota's newest RAV4 model, illustrated through the example of Nancy and Ira Berman from Connecticut, who ordered their RAV4 in March and waited six months for delivery. Despite the lengthy wait, the Bermans found it worthwhile given their access to other Toyota vehicles.
The supply situation is critically tight, with dealers maintaining only a few days of RAV4 inventory. Most vehicles are pre-ordered by customers and delivered directly upon arrival at dealerships. This pattern is highly unusual for mainstream vehicles in the small mid-size crossover segment, typically seen only with specialty vehicles released infrequently.
Two primary factors are driving this demand surge. First, the RAV4's popularity has steadily increased over recent years, with nearly half a million sold in the US last year. Toyota reports that dealers are selling through inventory as fast as production can supply it, with plans to build 200,000 more cars this year than last year, yet dealers still maintain only 10 days of supply and request more inventory.
Second, rising gas prices resulting from Middle East conflict have significantly increased demand for hybrid vehicles, which now account for nearly one in five new vehicles sold in the US. Toyota's strategy of limiting RAV4 production during the transition to the new hybrid version has positioned the model perfectly to capture market demand, creating a sweet spot where supply cannot meet demand.
Key Insights
- RAV4 inventory is turning over so rapidly that dealers are proactively calling customers from their waiting lists to inform them vehicles are ready for pickup, a sales pattern typically seen only with specialty cars released once every ten years, not mainstream mid-size crossovers.
- The RAV4's popularity has grown to nearly half a million units sold in the US last year, and Toyota's dealers are selling through inventory as fast as production can supply it, with dealers maintaining only 10 days of vehicle supply despite building 200,000 more cars than the previous year.
- Hybrids now account for almost one in every five new vehicles sold in the US due to the spike in gas prices caused by the war in the Middle East, significantly increasing demand for hybrid-powered vehicles.
- Toyota's decision to limit RAV4 production while transitioning to the new hybrid version has positioned the model to capture heightened demand, creating a market sweet spot where the vehicle is in exceptionally high demand relative to available supply.
- The Bermans ordered their RAV4 in March and waited six months for delivery, demonstrating that customers are willing to endure substantial wait times for the new model despite the inconvenience.
Topics
Transcript
[0:01] Want to know how strong demand is for the newest version of Toyota's RAV4? Consider Nancy and Ira Berman of Danbury, Connecticut. >> It's a new grill. >> Oh, that's right. It's got the new grill on there. >> They ordered their new RAV4 in March, and 6 months later, they are still waiting to take delivery. >> The wait was a slight annoyance. It didn't stop us from going and doing because we do have our other Toyotas to [0:32] drive. It was worth the wait. >> Even though Toyota is gradually ramping RAV4 production, demand for the new model is so strong, dealers have only a few days supply in stock. In fact, most are turned over…
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