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Welcome to Daily Drive for Friday, December 26, 2025. I'm Kellan Walker in Las Vegas. To down the show, we continue our look at the past year in the auto industry with a conversation about Toyota's fortunes in 2025, as well as a bit about Subaru as well. I'm joined by automotive news Toyota and Subaru reporter Larry Velliquette, as well as Atlanta Bureau Chief, Irvash Kakaria.
Toyota makers, Toyota was pretty quiet in terms of splashy announcements. In your mind, what were the highlights in 2025? Their big announcement this year is their Gorilla, right, which is RAV4, which is industry sales Gorilla. It outsells what I think 11 other brands, by itself, 11 other brands in the market that are mass market brands. RAV is a monster. It's going all hybrid. It's going to
start. The production has already started. They're doing it across different plants in Japan and Canada and the US, trying to get the volumes right. They are going all hybrid, and then plug-in hybrids are going to be available nationwide. They were confined to zevstates. So you're going to have plug-ins that are going to represent they think about 20% of the total volume, which is a huge uptick compared to what they were. They were, you know, pretty rare.
Otherwise, they, when they were called prime, which was stupid, but they got rid of that. And now it's just the the the RAV4 plug-in hybrid. That's the big rollout. It's going to come right after the first of the year. They'll start rolling into dealerships, and it really is. It's a nice package. And for Toyota, that's really all they had to concentrate on this year, which is okay, because they have to get that right. They cannot screw that on.
How has this year been for sales and financial results? Sales Toyota is killing it with their hybrids. They're killing it overall. They're doing it with the industry's lowest inventory, the fastest turn rate in the industry, which if you're Toyota dealer, you are, you're living in mana right now. You're making money hand over fist. And it's even better if you're a Lexus dealer.
Because Lexus is on a on the cusp of as we record this on the cusp of it's topping 350,000 sales in the US for the first time.
And to go along with that record dealer profits. Every Lexus dealer is making more money than they know what to do with it. Larry, how are they doing this? Like what is it that Toyota Lexus just in general is doing that other brands just aren't adopting.
And doing because it's like they're doing something right that everyone else just isn't doing.
I can tell you again point to exactly the point why they're doing this right out of COVID right they made a conscious decision to look around and say, Hey, you know what everybody's doing really well right now.
And why are they doing while they're doing well because the inventories are tighter. Their dealers don't have all these carrying costs and because the inventories are tighter. We don't have to do incentives.
Everybody's making more money. That's that's why the entire industry had record profits in 21 and 22 coming out of it. Toyota said, Hey, you know what, let's do that.
There's no reason we have to go back to, you know, pushing out all these all these cars and having cars sitting all over dealer lots and having dealer stock more than what we need. And so then we feel like we got to have incentives.
They purposely made the choice to learn the lesson and they were one of the only automakers that did.
If you look, I mean, I do the I do the monthly inventory story for us every month right have for years.
If you look, they're the only ones who maintained the discipline coming out and they did it on, you know, on a conscious level.
That's why they're killing it right now. That is that and the fact that they stuck with their 100 year plan at the end 100 year plan. Every time you say that, they don't respond to, they don't respond to quarterlies. They just say, you know what, our plan is to do hybrids and and if somebody wants a BEV will do BEVs and if somebody wants gas will do gas will have all those options available for everybody in everything. Now that's more expensive.
But if you're doing that and you actually give what you listen to your customers and you say, okay, you're you're not convinced to go BEV. You want to go, you want to have step. Well, we have that right.
And that was that was part of their 100 year plan. Now it helped that they pioneer that technology what 30 years ago.
So they, you know, they're familiar with it. They've it's permeated their lineup now.
But you know, you look at a camera. I don't know if you've been in a camera recently. I have not. In the, the, yeah, okay, you drive this slow. Yeah, yeah, no, you're both, you're both drive testless.
But if you sit, we have good taste.
Believe that in, leave that in right. Oh, don't get me started in both of you.
Yeah, you know, you know, you know, you know, you know, you know, you know, one of the, one of the least one of the lesser expensive cars in Toyota's lineup. It's 52 miles of gallon.
It's, and it's a comfortable package. It's a sedan, right.
But it's, it's a phenomenal vehicle that they can make cheap and they're all hybrid. So there, so you get, you know, you get that 52 miles of gallon, there comes in an all-wheel drive option. If you want that, you comes in a plug-in option. If you want that, they deliver that and it works.
You will take care of it for it. Okay. Before you move to the fan manufacturing, I want to ask you a question. This might be good. I'm sorry, Cal, I don't need to go ahead. Go ahead.
Does Japan need three automakers? Does the world need three, need, need all three Japanese automakers? Maybe that's the question. No, I wish it was only three. You forgot about Mazda and Subaru and Mitsubishi. Yeah, but there are Mitsubishi.
Yeah, Mitsubishi is a rounding era for everybody, right. Suzuki.
Okay. No, I mean, maybe you talk about the US, but all I'm trying to say is, do we need a Nissan in addition to a Toyota and Honda? What, what does Nissan bring to the table that differentiates them?
Well, it depends on if you run a rental car company or not.
Damn.
I mean, hey, just go drive through the thrifty car lot. Oh, man, it's packed full of them.
And see what you, yeah, and see what are in there.
This is crazy. Last time I was just recently in LA and I need to get my rental car and I'm at Avis and I saw a line-up of Nissan's.
And I'm like, whoa, there are a lot of these, but like, it's noticeable, right?
Like you go to a rental lot, you're like, oh, there's rental cars.
But then you notice when you see a lot of a certain nameplate.
The Dodge Charger.
And again, this comes back to the whole Nissan's, you know, mistaken strategy of pushing volume,
whether it's because they needed to keep their factories pumping.
And they were like, that's not how we sell the cars is not a problem.
We're just going to like make that the deal is problem.
Yeah, well, and you look at what, look at what I don't think most people realize this, right?
When do auto makers get paid for their vehicle?
Yeah, they get paid the second it leaves the factory door.
They're customers, the dealer.
Yeah, yeah, they're customers, the dealer, but they're customers also the rental car agents.
Yeah, right?
And they need if if you're an auto maker that's struggling for cash,
and this is exactly to my earlier point, this is exactly what GM and Ford and Chrysler went through,
right?
If you're struggling for cash, what do you do?
If you ramp up the factories and you crank out the vehicles, no matter, you know,
no matter and don't really care where they go.
And then you stuff them wherever they'll, you know, wherever you can find a place for them,
whether that's rental car places or on your dealer, lots delivering them mid-night.
So, so that, you know, the dealers couldn't sign for it.
That was an old, that was an old Chrysler trek during the bad times.
Everything that these guys do, if your vehicles are on the rental car lot,
you're hurting your customers theoretically, right?
Because you're putting more vehicles in than what the market, what the retail market can stand.
You're lowering the residual values, hurting your residual values.
And if you're an auto-biker that needs money, you do that because that's how you keep the doors open.
Maybe, you know, Carlos Gones legacy needs to be, you know, as the savior of Nissan.
Maybe that chapter was not already written.
And maybe he saved them in that moment.
But then he also set them up for their car and challenges.
Yeah, that piano box wasn't big enough for us.
Yeah.
Coming up, we'll talk more about Toyota's electrification strategy throughout 2025
as well as about Subaru's year in 2025.
That's next on Daily Drive.
Toyota opened its first US battery plan outside Japan and North Carolina with a 13.9 billion dollar
investment producing batteries for hybrids and EVs.
What is that going to mean for its US strategy going forward?
So this is an interesting point, right?
They did this obviously several years ago.
It is just now coming online.
It's seven plants all in this one location in Liberty, North Carolina.
And luckily for Toyota, they can switch between hybrid batteries and plug-in hybrid batteries
and what they're building.
What's funny to me is that if you look at the criticism that Toyota got late in the Biden
administration from folks like public citizen, you criticize Toyota for not going,
not jumping in, not going in all EV, right?
Why aren't you EV?
Your cars are boring.
Your cars are, you know, your why aren't you Tesla?
And all those other automakers were chasing Tesla's
valuations.
They're stock valuations, right?
Why can't we be Tesla?
Why can't we be Tesla?
Look at general motors.
Look at all the commitments that everybody made.
We're going to go 100% EV by X, right?
But now, as all these other automakers are pulling back hard on their all EV plans,
Toyota is still actually coming out with EVs.
Why?
Well, it goes back to stupid 100-year plan, right?
But because some of our people want EVs, so we're going to make EVs.
So they're still doing EVs.
And launching them, and they're just telling their dealers, so what you can, you know?
You don't have to carry a hundred of them.
Volkswagen, right?
You don't have to, your life doesn't have to be stuffed full of them.
But if one of your customers wants one,
we'll make it for you.
And we'll have it available to you.
So you kind of organically grow your
that business still.
That Tesla started, you know?
All credit words do.
They did start it.
But Toyota is actually proceeding with it.
And it's got three new EVs coming this year, which is just crazy to me.
Well, Larry, with 42% of Toyota sales already coming from hybrids,
what's the ceiling for hybrid demand?
That 42% is going to change, right?
Next year when RAV is all hybrid,
that 42% number is going to jump hard.
They're going to be up around probably 60%.
Because most of the RAV fours,
that the 445,000 RAV fours that they sell a year
were not hybrids.
That number is going to change.
That percentage is going to change.
So you've got Camry's going to be all hybrid.
You're going to RAV four is going all hybrid.
You're going to see other vehicles go all hybrid
because it, you know, from a functional standpoint for customers.
They want to, you know, they want to,
who wants to pay more money to oil companies?
Right?
Purposely.
And it, you know, it's an easy technology.
30 years in, people finally understand it.
Although dealer still tell me, oh, I got to explain that you don't have to plug it in
to customers.
But people finally understand it.
And they realize, hey, it's not that much money up front.
And I'm saving money at the pump every time.
And I feel good about that.
So I think, you know, I think you're going to see that that percentage go from 42%
to somewhere north of 60.
Interesting.
Now, you brought up earlier Alexis on the cusp of topping its sales record.
How about century?
What should we expect for the announcement of the century brand in
2026?
There's two sub brands.
One is century.
And the other one is GR.
They're coming in 2027.
So we're going to have a little bit of time before they show up.
Yep.
And these are both bespoke vehicles, right?
Century historically have been handmade vehicles.
They're, you know, the presidential limousines in Japan.
They are, you know, they build a, if you've never watched,
going YouTube and watch a video of them building a century by hand,
where you see the guy with white gloves going over every panel to make sure that it's perfect,
that it fits everything fits and everything works.
These vehicles are going to launch one.
The GR is a sports car.
It's a two-seat sports car.
And then the return of the Lexus LFA as a EV,
which is, that's kind of exciting, right?
Right now it's a concept, but it's coming.
And then century is going to be, we're not sure yet what vehicle we're going to get.
At first, I would imagine it's going to be the century SUV that they showed in Tokyo.
I think it's, I think for Lexus dealers, it's a subset of Lexus dealers that are going to sell these,
not every Lexus dealer.
It's an opportunity, it gives them a halo vehicle,
that Lexus really never hasn't had since the LFA.
And then we had 500 of those globally.
These are going to be a little more volume.
I haven't had anybody explain to me how they're going to do global
vehicles, so I haven't had anybody explain to me how the volumes are going to work yet.
But I think if you're a Lexus dealer, you're very excited about that prospect.
So Larry, you also cover Subaru.
What's the biggest thing going on with them right now?
Well, Kel, from the product standpoint, it's the redesigned outback,
which is in their triumvirate of popular products along with the cross-strike and the forester.
From their dealer perspective, the big news this year was their facilities program
that they got handed to them this fall.
That facilities program is going to mean an investment for dealers.
The good news is that Subaru has decided to work with the dealer council to make sure that
they don't have any issues. When it first launched, I got some complaints
from dealers who kind of got caught flat-footed just catching up to the last facilities program
and found that they would soon be out of compliance because of that.
So they have decided to work together to make sure that everybody stays in compliance.
It is a different look. It's part of Subaru's attempt to kind of grow up a little bit,
to grow out of the, you know, it was an niche player for a very long time,
and it's trying to, you know, push into the mass market. They want to grow their volume share
in the US up to 4.2 percent next year, which is a heavy lift.
And to get there, you know, they're going to have to push some buttons.
But, you know, like we said with, like Irvash and I talked about with Nissan earlier,
chasing market share can be really, really treacherous.
If you have these market share goals and you're not disciplined and how you're going to do them
and you're doing them for the wrong reasons, you know, that can go back.
If they do it well, if they say, okay, we're going to grow organically and we're going to get
to 4.2 percent, that's our projection. But we're, you know, 4.1, we're not going to be disappointed.
That's okay, right? Or 4.0. If they get there organically and they say we can do this naturally,
then it's great. But if they chase values, boy, that can be the start of ruination.
That's daily drive for today. I'm Kellan Walker.
Thanks to automotive news executive producer Jake Nier for his help on today's podcast.
You can get the latest news on manufacturing, product planning and everything happening in
the auto industry at autonews.com. Come back on Monday for a look at how automotive tech and
innovation fared throughout 2025 amid massive policy shifts. The biggest tech story of 2025
from my perspective was the administration's pullback of federal support for electric vehicles
and that took many shapes. We'd love to hear from you. Let us know what you think of the show
when the topics we cover today. Send us an email at dailydriveatautonews.com or leave us a voicemail
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About this episode
A deep dive into Toyota and Subaru's performance in 2025 reveals Toyota's dominance with the RAV4 leading hybrid sales and a strategic pivot to hybrids and plug-in hybrids. The discussion highlights Toyota's disciplined inventory management, which has led to record dealer profits. Subaru, on the other hand, focuses on its redesigned Outback and a new facilities program aimed at enhancing dealer compliance and market share. The episode also touches on the challenges of chasing market share and the evolving landscape of the automotive industry.
Daily Drive's year-end series continues with a look at Toyota and Subaru's 2025. Automotive News Toyota reporter Larry P. Vellequette and Atlanta Bureau Chief Urvaksh Karkaria discuss Toyota's electrification strategy throughout the year and how the world's largest automaker adapted to shifting market demands. Plus, a look at Subaru's performance in 2025.
