I concur with your observation. I live in Ohio and have searched the Ohio market for new 2008 Avalons. There are very few Avalons out there which seems odd. Additionaly they are being offered at some locations for sale at or below invoice.
These are sales figures, not actual production numbers, although I'm not sure how much difference there would be. It would not surprise me if Toyota did a major rethinking of the Avalon based on these numbers. Even though it's considered their "flagship", they have never marketed it very well.
I never see any commercials for the Avalon, I was watching TV last night and they have this Toyota comercial on with ALL of their cars besides the Avalon.
They kept looping the Corolla, Camry, Sienna, Tacoma, Tundra, Sequoia, etc.. but no Avalon,, why,, I don't understand...