Toyota looks to turn new compact SUV into global flagship

Toyota Motor plans to make its new C-HR compact sport utility vehicle a key global model, aiming to shore up a weak link in its lineup as small SUVs grow more popular.

Toyota produces and sells such cars as the Corolla compact, the Camry midsize sedan and the RAV4 SUV worldwide. While the Corolla is popular throughout the world, Camry and RAV4 sales center on the U.S. The Japanese automaker will position Europe and China as key markets for the compact SUVs its lineup had lacked, aiming to shore up its market share.

Production is slated to begin in the fall of 2016 in Turkey and Japan’s Miyagi Prefecture, then expand in 2018 to Thailand and China’s Tianjin and Guangzhou. Annual capacity is expected to reach roughly 300,000 vehicles. Toyota will make about 10,000 C-HRs a month in Turkey and China, 5,000 in Japan and around 2,000 in Thailand.

The automaker will switch existing lines over to C-HR production rather than expand overall capacity. It is expected to spend tens of billions of yen on dies and other necessary equipment.

As part of its manufacturing reforms, the automaker has adopted the Toyota New Global Architecture design initiative, which entails such measures as standardizing parts across multiple models. The C-HR will likely be the first new model based on this framework. It will share a platform and other key parts with the revamped Prius to go on sale in December.

Toyota will supply the European market from the plant in Turkey. In Japan, the vehicle will be positioned as the effective successor to the RAV4. While low oil prices have fueled brisk sales of big SUVs in the U.S., Toyota sees some demand for smaller SUVs as well. It will sell the C-HR under the Scion brand aimed at younger consumers.

Toyota plans to offer a model with a turbo gasoline engine as well as a hybrid model. It aims to use the latter — as well as a hybrid version of the Vitz compact, a Japanese mainstay — to help it achieve its goal of selling 1.5 million hybrids a year by 2020. Its hybrid sales in 2014 totaled 1.26 million vehicles.

A U.S. research firm expects global SUV sales to outpace sedan sales and account for one-fourth of vehicle demand by 2020. Smaller SUVs, which are more affordable and suited to driving on city streets, are especially popular in Europe.

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