Toyota New Zealand has made a massive change in how it does business with both its customers and its dealers, switching to an agency model with fixed prices.
Dubbed the ‘Drive Happy Project’, the move comes with a raft of updates to the brand’s operations, including a revised website, test drive systems and fixed-price service plans with offers of warranty extensions.
“Our way of business needs to evolve to align with our customers’ expectations,” says Alistair Davis, chief executive of Toyota New Zealand.
“As a result of the changes we are making customers will save time and money, and have more choice.”
“We want to put the pleasure back into buying a brand-new vehicle. We are taking a more customer-centric approach to car buying and the entire ownership experience.”
Davis said the vehicle selling process had not changed much in the last 50 years, yet today the majority of customers were using online tools to research options before their purchase.
“We’re not alone in having made new vehicle purchases a drawn-out affair that takes the gloss off the experience,” says Davis. “We’ve observed and listened to customer feedback and are re-shaping the purchase experience.”
Toyota-commissioned research found several likes and dislikes about the current industry-wide buying experience.
The most common concern was price negotiation and never being sure if you got the best deal. While the research also found the right vehicle for the buyer’s needs was more important than the best price.
“I want to make it clear Toyota has no intention of eliminating the local dealer,” Davis stresses. “But we also think there are some challenges with the dealer model.”
As reported last year in AutoTalk, fixed pricing under a traditional dealer model would have anticompetitive regulation issues http://autotalk.co.nz/news/toyota-making-major-dealer-structure-change, so dealers will no longer own or on paper sell new vehicle stock – they will work under an agency model, earning a fee, fixed across the network that varies by model. They are known now as ‘stores’.
New ‘Toyota Driveaway Pricing’ will be released on April 1, coming into play following the Easter trading halt on April 2. Expect prices similar to average transaction rates – with some dramatic cuts from current retail levels. All costs, including pre-delivery, floor mats, a tank of fuel and in the case of diesel road user charges are included.
Toyota claims to do around half its business in direct sales to fleet and rental operators, and Davis made it clear this is not a trade they will be walking away from. A similar system to TDP is already in use with these customers, with discounts based on volume and customer need.
Most models have been listed at promotional prices in recent months to soften the transition.
Toyota will also offer a seven-day money back option, as long as conditions are met, for customers who are not satisfied with their final purchase. Cars need to be returned in ‘as new’ condition with less than 500km travelled.
Vehicles will be kept in three ‘pools’, located in Auckland, Wellington and Christchurch. Around 1000 units will be held at any one time, with dispatch usually the day after the sale, and arrival at the dealer the day following – except the bottom of the South Island, which may take an additional day.
Unlike Honda New Zealand’s agency system, Toyota stores will own their demonstrator stock – and while they can be sold it will only be after they have served in the fleet for a fixed period. More demonstrators will be on offer, with overnight road tests offered to customers.
Salespeople have been re-trained as ‘Vehicle Consultants’, ‘Product Experts’, or the ‘Store Concierge’ to help customers select the best vehicle for their needs. Toyota does not involve itself staff remuneration, though has an ‘aim’ to have no more commission-only sales staff at stores.
The updated website features a vehicle builder, and while fixed pricing paves the way for online sales, this is not currently planned.
Vehicles will be offered with four years of fixed price servicing, offering customers discounts of up to $2000 on commercial vehicles over the period. Meet the service structure for three years, and customers will be given a two-year extension on their warranty.
Changes positive
Davis told AutoTalk at yesterday’s reveal of the Drive Happy Project they had been talking for some time with dealers about the change, and while there were points that had to be worked through, the move has been seen as positive.
That was backed by Armstrong Motor Group managing director Rick Armstrong, who has three Toyota dealerships in Auckland – who told us the changes have been coming for a long time.
The changes should be positive for business, he says. “All brands have quite sharp retails, and the room for discounting is a lot less. It’s arguably the best time to buy new cars at the moment.”
Read a full discussion of the Drive Happy Project, dealer feedback and analysis of new pricing in the next AutoTalk magazine.
http://evtalk.co.nz/new-zealands-cheapest-new-plug-in/
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