Section 5. Expansion of Sales Systems in Japan and Development of Markets in Other Countries

Item 3. The Advance of Knockdown Exports

In the 1960s, Japanese automakers became more positive about conducting business in other countries. Exports of Japanese automobiles increased from 35,000 units in 1961 to 90,000 units in 1963, approaching the 100,000 unit level. It was under these circumstances that Toyota's annual exports exceeded 10,000 units for the first time in 1961, and sentiment for full-scale exports became increasingly favorable.

At this time, most exports of Japanese automobiles were knockdown exports.1 These knockdown exports were an effort to secure market presence in response to the domestic production policies of importing countries. Toyota conducted knockdown exports to Mexico, South Africa, Australia, Thailand, the Philippines, and other countries.

Complete-knockdown2 exports to Planta Reo de Mexico, S.A. began in 1960 but were terminated in March 1964 because of the Mexican government raising the domestic production rate as well as the bankruptcy of Planta Reo.

At that time, South Africa imposed restrictions on the import of completely built vehicles and encouraged the complete-knockdown format. In 1962, a distributor agreement was entered into with trading company Toyopet Commercials (Pty.) Ltd., finally signed in January 25, 1965, and the following year complete-knockdown exports of the Stout (RK45) began through the company for assembly by Motor Assemblies, Ltd., a local assembly company. Toyota leaped into the top ranks of the South African small-truck market in 1963 when the Corona pickup (RT26) was added.

In Australia, a distributor agreement was signed with Thiess Sales Pty. Ltd. in February 1961 and exports of trucks and the Land Cruiser began. Shortly after that, however, shifting to local production became a significant issue, so Toyota searched for a distributor that could locally assembled passenger cars. At that time, Australian Motor Industries Ltd. (AMI) was conducting local assembly of Triumph and Mercedes-Benz vehicles, but the Triumph vehicles were not selling well and the company was looking to replace them with a new compact passenger car.

The Toyota Tiara (the export name of the Corona) adequately met AMI's requirements, and following negotiations with AMI, an assembly and sales agreement for the Tiara was signed in November 1962, and complete-knockdown exports began the following year.

With respect to trucks, Thiess Sales continued to handle assembly and sales. With the addition of passenger cars, Toyota's exports to Australia increased from 651 units in 1962 to 4,339 units in 1963, and Australia became Toyota's largest export market. With the later addition of the Crown and the Toyota 700 (the export name of the Publica), Australia maintained its position as Toyota's largest export market until 1965. Toyota Motor Co., Ltd. established a representative office in Melbourne in July 1963 and worked to reinforce its sales support systems.

In June 1966, the Australian government implemented a domestic production measures that reduced local content requirements for small volume manufacturers. Toyota introduced the Corona under a 60 percent domestic production plan based on these measures and made up the portion in excess of the quota through exports from Australia of completely built vehicles. The Crown was added to the approach in 1967, and the Corolla was added in 1968. Australia's adopting such an active domestic production policy while having a flexible approach to exporting completely built vehicles allowed Toyota to supplant Volkswagen as the top imported brand in 1967. This was a first for Toyota in a major market outside Japan.

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