Why Toyota’s New Rav4 Is In Such High Demand transcript

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 six 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 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 to customers who ordered them as soon as they're delivered to a dealership. It's really unusual to see cars fly off the dealer's lot like this. I mean, in fact, most dealers are just calling their customer list saying, hey, can you pick up the car now?

It's ready for you. We don't see that very often. You see that often with specialty cars that come along, you know, once in a once every ten years. It's not something that exists in that very practical, very suburban, uh, small mid-size crossover segment. Two things are driving strong demand for the Rav4 right now. First, in recent years, the Rav4's popularity has steadily grown, hitting almost a half million sold in the U.S. last year.

Our dealers are selling through our inventory as fast as we can build it. This year, we'll build 200,000 more cars than we did last year. And the dealers are still going to sell right through it. They end every month with ten day supply of cars and they're asking for more. Meanwhile, the spike in gas prices due to the war in the Middle East has created even greater demand for hybrid vehicles this year, hybrids account for almost one out of every five new vehicles sold in the U.S..

Add in the fact Toyota has limited Rav4 production while it transitions to the new hybrid version, and you see why this model is in the sweet spot of the market right now. Typically, auto dealers like to fill every spot in their lot with a new car waiting to be sold. But for many Toyota dealers like this one in Milford, Connecticut, the demand for a new Rav4 is so great and the supply is so limited, they're unable to fill many of these spots.

This lot can handle another two 250 more vehicles, so I'm probably about a third full capacity this summer. Bobby Crabtree's dealership, Colonial Toyota in Milford, Connecticut, has seldom had more than a handful of new rav4's on its lot. In fact, the new Rav4 in the showroom has already been sold. It is sold before it's here. You know, when somebody when you have cars that are you know, if you have people out there for two months, three months waiting for the car, that's not only good for us as the dealer, but it's actually very good for the customer.

While plug in hybrid versions of the Rav4 are imported from Japan, Toyota builds the gas electric hybrid versions at plants in Canada and Kentucky. And while the company is steadily building more models, it won't be at full production until well into 2027. Which raises the question is Toyota at risk of losing customers who don't want to wait? You're always putting yourself at risk when you don't necessarily have that production that keeps up with demand.

Well, everyone go to a different brand. Probably not. There's other vehicles within the Toyota lineup that consumers can go to. The fact that they're all hybrid now, that definitely helps. I think Toyota also has a lot of brand loyalty. People that buy a Toyota, technically, they stay with Toyota for for many years, not just one vehicle purchase, but several. But I think there always is going to be that risk. The Bermans expect to receive their new Rav4 shortly and are eager to take it out on a road trip.

We can go cross country if we want to and just enjoy ourselves. And best of all, we're together in the car, driving together.