Back in 2021, we reported that supply of parallel imported Toyota Vellfire coming out of Japan is going to become increasingly tight in the coming years, as sales of the Vellfire have dropped tremendously, and as a result of the poor sales - there will be no successor to the AH30 generation Vellfire.

Obviously, that didn’t come to pass as a new AH40 generation 2023 Toyota Vellfire was launched yesterday in Japan, alongside its twin the Toyota Alphard.

Many were surprised that the Vellfire survived the cull. Speaking at the launch, Toyota board member and Chief Branding Officer Simon Humphries, who also oversees design work, confirmed it is true that Toyota wanted end the Vellfire to focus on the better selling Alphard, but that decision was reversed mid-way.

“The Alphard and Vellfire have both enjoyed an incredible rivalry over the years.

“But with the Alphard becoming increasingly confident, the difference between it and the Vellfire has narrowed to such an extent, that we did in fact consider discontinuing the Vellfire this time.”

However, when the decision was shared to other stakeholders, including dealers, the product planning team faced an unexpectedly strong pushback even though the numbers justified their decision.

“People in the development team, management, dealers and even some VIP advisors expressed disbelief that this could even be considered...

“How could we throw away an icon?” said Humphries.

Perhaps Chairman Akio Toyoda’s passion for cars, his firm belief that sometimes one needs to look beyond the numbers, have turned some hardened Toyota veterans into firm believers that that some cars are worth going to extra mile for.

For context, sales of the Alphard and Vellfire twins used to be split almost 50:50. In 2017, there were 46,399 units of Vellfire sold in Japan, versus 42,281 units of Alphard.

By 2021 however, something happened - sales of the Alphard rocketed to 95,049 units while the Vellfire fell off the charts, dwindling to just around 5,000 units.

That ‘something’ that killed the Vellfire’s sales was Toyota’s decision in May 2020 to consolidate its 4 separate dealer networks - Toyota, Toyopet, Corolla, and Netz - into one unified Toyota Mobility Store channel.

The car market in Japan is quite different from Malaysia. Sales is done on a very personal, localised neighbourhood relationship-style manner. The same dealer that sold you your first car, will service you and your family’s motoring needs for the rest of your life.

When you get a promotion at your company, the dealer will recommend you an upgrade; when your son/daughter gets his/her driving license, the same dealer will be ready with brochures of their entry level cars.

At its peak in the early 2010s, Japan used to sell around 5.5 million cars annually, and Japan isn’t as small as their tight streets and small kei minicars lead us to think. Japan is actually 15 percent bigger than Malaysia, and with many more metropolis cities.

Combine this with a very trust-based relationship way of selling, this multi-channel divide-and-conquer approach to cover the vast Japan, each network focusing on different regions, each selling slightly different cars, make sense.

Back then, the Toyota Alphard was only sold at Toyopet dealers, while the Toyota Vellfire only at Netz dealers.

This multiple sales channels and differentiated product range strategy is great for sales but the high variation in model lines drove manufacturing cost up, which in turn drove Toyota’s financial controllers crazy.

When Japan’s car market contracted in the late 2010s as a result of its ageing population, poorer job outlook for young people, and high cost of car ownership, the first thing Toyota's financial controllers threw out was Toyota’s unnecessarily high model variation, and along with it, the separate sales channels.

With less variants, there is no longer any differentiation between products sold by Toyopet and Netz dealers, or Corolla and the company's namesake Toyota dealers.

With a unified Toyota Mobility Store, suddenly the data showed that customers overwhelmingly preferred an Alphard, but had previously bought a Vellfire not because they liked the Vellfire more, but because they want an Alphard sold by their preferred dealer.

It was a very simple management decision – kill off the model that nobody was buying. At least that’s what the product planners thought.

As Humphries explained, the Vellfire is an iconic name and it's a name worth saving, even though their Excel sheet says otherwise.

With the new direction to preserve the Vellfire’s nameplate, the development team had to go back to the drawing board to differentiate the Vellfire further from the Alphard.

If the Vellfire is to justify its presence, it can no longer be just an Alphard with an angrier face.

“If both are bespoke cars, then...

“The Alphard, with its power and confidence, is without doubt the epitome of bespoke formal...

“But the Vellfire has a dark, aggressive character that can only be described as bespoke dynamism.

“The two vehicles can continue their rivalry, but be happy in the knowledge that each has a clear character and position,” said Humphries.

This is why 2023 Toyota Vellfire gets the 279 PS / 430 Nm 2.4-litre turbocharged T24A-FTS engine, paired to a Direct Shift 8-speed automatic, while the Alphard gets the old 182 PS / 235 2.5-litre naturally aspirated 2AR-FE engine from the old Camry, paired to a CVT-type automatic.

Alphard buyers couldn’t be bothered about what’s underneath the bonnet, but the Vellfire needs the power to match its looks.

While the headline grabbing 279 PS turbocharged Vellfire will get the attention and bring buyers into showrooms, it is the more sensible Vellfire hybrid that will form the bulk of the sales in Japan, because RON 90 petrol sells there for RM 5.50 per litre.

The 250 PS 2.5-litre A25A-FXS hybrid is the common engine for both the Alphard and Vellfire. The 3.5-litre V6 is no longer offered.

To keep the additional power under control, the Vellfire also gets its additional chassis brace in the engine bay for improved body rigidity.

Consistent with its lower sales volume and higher performance engine, the Vellfire has a significantly higher starting price than the Alphard – a shocking 21 percent higher! Again this makes sense, if data showed that it is the Alphard that is going to sell better, there's no reason to keep the Vellfire in the same price range. Strong product differentiation is key.

Prices of the AH40 generation 2023 Toyota Vellfire starts from 6.55 million Yen for the turbocharged variant, and 6.9 million Yen for the 2.5-litre hybrid.

Its twin, the Toyota Alphard starts at 5.4 million Yen for the regular 2.5-litre variant, and 6.2 million for the 2.5-litre hybrid.

This is quite a change from the AH30 generation, when local distributor UMW Toyota positioned the sportier Vellfire as the cheaper entry point, offering it here with a smaller 2.5-litre engine (then priced at RM 382,300), and positioning Alphard as the more exclusive luxury car, with a 3.5-litre V6 (then priced at RM 464,000).

We expect UMW Toyota Motor to launch the AH40 generation 2023 Toyota Alphard / Vellfire by the end of this year.

As a fully imported (CBU) model, there is less lead-time required (no need for parts localization and retooling the plant) before launching the new model here locally. It’s pretty much a case of ordering the cars in the company’s internal system and getting the necessary vehicle type approval (VTA).