INTERVIEW NEERAJ LALA

The Toyota NZ head has a beautiful, carbon-neutral dream. The new Highlander hybrid has a big role to play in its realisation.

Toyota bZ is the phrase coined to describe Toyota’s commitment to going Beyond Zero and achieving carbon neutrality through the provision of low-emission powertrains. The newly-launched Highlander hybrid is another step on Toyota’s bZ journey and is the ninth Toyota model line sold here with proven hybrid technology that many customers now regard as mainstream.

Toyota NZ CEO, Neeraj Lala, says it will contribute handsomely to the company’s year-end emissions target – a weighted CO2 average of 160g/km or less across all vehicles sold here. That would be some achievement, although it’s a long road short of Toyota NZ’s medium-term goal of 105g/km by the end of 2023.

Put simply, Lala says Toyota urgently needs to bring low emissions to the broad car park. Highlander is already a popular nameplate on Kiwi roads and he expects Highlander hybrid will appeal much more to private buyers than the outgoing, V6-only model ever did.

“Previously there’s been over-reliance on the rental channel. Not having a more fuel-efficient powertrain held the car back quite a bit,” he reflects. “But hybrid tech brings huge efficiency gains and is absolutely mainstream for us now.”

Lala insists Toyota customers are now prioritising driveability and efficiency of cars over plain technical data or straight acceleration. “I think the tipping point was when the performance of the hybrid powertrain improved to the level of the traditional engine and people got their heads around the fact that they didn’t have to plug it in.”

While you would think that any new model would have its work cut out making an impact in a market saturated with new SUVs, for Highlander hybrid, it’s a case of so far, so very good.

The local market backdrop shows that, year to date, 52 per cent of vehicle sales are SUVs, with 40 makes offering more than 135 SUV models in total. As of early June, about 600 Highlander hybrids have been pre-sold locally. Toyota only expects to supply 1200 new Highlanders in the second half of 2021 and next year’s allocation currently stands at 2250 units. But Lala expects to be able to sell many more if supply becomes available.

“With the hybrid, I’d be surprised if Highlander didn’t contribute at least 10 per cent of our total sales volume. We’ll take orders to Japan and try to get additional supply, either by America producing more – if they can get the supply of batteries – or if another RHD market opts to reduce its allocation for some reason.”

Overall, demand for new vehicles has never been greater for Toyota, the only non-New Zealand company in Colmar-Brunton’s list of the Top 10 most respected companies, and Lala says customer loyalty and patience are also unparalleled. He’s forecasting 32,000 sales in 2021, however exceptional product demand on the back of low interest rates, a resilient economy and ongoing supply constraints mean the CEO and his team are faced with managing 11,000 back orders. They will take at least four months to fulfill. And fresh orders keep rolling in...

“At the same time we’re seeing behaviour change in that people are prepared to wait extended periods. They don’t expect compensation for delays, they just expect communication. And they’re more understanding and forgiving than ever.”

Aside from the efficient hybrid powertrain, Lala insists another key Highlander selling point is its clear push upmarket. “In the past, a GXL model was a genuine entry-level grade. The four grades used to be determined by safety. Now, whether you get the lowest grade or the highest grade, safety is not compromised at all. So grades are now determined by luxury features or extra tech.”

He further believes evolution in the SUV categories coincides with “a new definition of luxury”. “All SUVs in the market are moving towards ‘new luxury’. Before it was leather seats; today, it’s more than bells and whistles, it’s about overall design, the in-car connectivity, the full experience. It’s a more diverse range of features, and many of them are safety-related.”

So which new Highlander features resonate most with Lala himself?

“The efficiency of this car is exceptional. I wasn’t actually a big fan of continuing the V6 but I gave in to customer feedback. A limited V6 range, however, gives customers the opportunity to test-drive the hybrid.

“But my favourite overall feature is Toyota Safety Sense. It goes over and above safety expectations and is such a big part of the Highlander equation. The advanced safety features excite me because it’s the start of the journey towards autonomous technology.

“Go back 24 months and we were on a pathway to Level 5 autonomy. We were talking about how driverless cars would reduce congestion and carbon. But the pathway to autonomous cars requires customers to become comfortable with the latest safety technology. This car, with its cruise control, will automatically slow down for a corner, which is helping customers get comfortable with level 5 autonomy. Now, that may not turn up for 10 years, but the skill level and assistance is going to make customers less anxious when it does turn up.”

In terms of Highlander’s sculpted new looks, Lala says Toyota has naturally had to carry a lot of styling influence from Asia, “but I’ve always been a fan of Toyota’s American styling”.

“This car is built in Indiana, and built specifically for the US market. There’s a boldness and toughness in the image it projects and the design cues. Just look at the strength of lines in the sculpted bonnet. Asian design tends to be more sleek, refined, shiny with more chrome and smoother surfaces. For an SUV, a stronger look has always resonated more with the NZ market and I love the new Highlander’s lines.”

How about improvements to the on-road experience?

“On a long road trip, the comfort is next-level, starting with the design and layout of the seats. I love the second-row captain’s chairs that keep my two teenage girls separate from my younger son in the back. The seven-seater is a lot more spacious than a strict five-seater and, on family trips, there are no complaints from the back seat. It’s simply more comfortable than the outgoing model.

“For me, this is the best all-round family car that we’ve brought into the New Zealand market,” Lala concludes. “It was my personal weapon of choice while working in the States for three years when practicality and versatility far outweighed V6 fuel consumption. The hybrid overcomes that issue.”

If the new Highlander range exceeds even Lala’s high expectations, will the hybrid powertrain be responsible for customers migrating from elsewhere in the range?

“We might potentially get some RAV4 customers moving to Highlander. We might also see Prado customers and ‘medium rugged’ customers saying, actually, Highlander hybrid is a more practical solution.

“But the beauty is that Toyota now offers customers the full breadth of practical, low-emission solutions. So, in terms of its importance in the range, Highlander is a significant new addition and it’s strategically very important. If anything, we would have liked it 12 months earlier.”

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