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Auckland City Toyota outside

Toyota takes new tack

Car distributors in Australia and other countries are watching New Zealand closely to see how the new Toyota business model takes hold and succeeds.

The company has switched from a dealership to an agency model– where the traders sell on behalf of Toyota at a set price and no longer hold stocks of cars onsite.

Instead, demonstrators (owned by the dealers) are offered for test drives and inspection while stock is owned and held by Toyota at sites on the outskirts of Auckland, Wellington and Christchurch.

The business model was developed partly in response to the ways customers like to shop. Toyota New Zealand research found customers spend more time looking at cars online, are happy to make their choices for trim and accessories online, and want more certainty around pricing.

The new model also helps Toyota prepare for the future, when car sharing, autonomous cars, and other changes in mobility start affecting individual ownership.

Toyotas Alistair Davis

Pictured:

Toyota New Zealand Chief Executive and Managing Director Alistair Davis

Alistair says “We don’t know just how all this is going to evolve but as a global corporation we need to play in that space.”

It is with one eye on the future, that Toyota Financial Services recently invested in Wellington-based company Mindkin which is developing car sharing technology. Toyota Financial Services is preparing to become a mobility company and expand beyond financing vehicles. Toyota is hoping the rise in new mobility services will provide opportunities for partnerships with tech firms, start-ups, and fleet sales to mobility providers.

The new business model is also expected to provide opportunities for some dealerships, now known as Toyota Stores. Alistair Davis says “In metro areas, where there are particularly high property costs, it is hard to make good returns on retailing cars. Over time, I think the retail footprint will get smaller. In the meantime, because the stores don’t need to hold stock, they will be able to free up space on their sites for their servicing centres, or use it to expand their used car areas.”

He says “There has been a worry that the model would eliminate dealer networks but we believe the dealer is still needed and is an integral presence for the brand.”

Alistair Davis says the country’s 35 Toyota stores will continue to represent the brand in their community, provide employment, and provide the face to face engagement customers will still need.

“One in four cars in New Zealand is a Toyota and being so dominant in the market requires a strong service infrastructure.

With around 750 demonstrators coming onto the used car market every few months, there is also potential for dealerships/stores to build up their used car businesses. “We have only just scratched the surface of the used car market.”

Toyota New Zealand is the first national Toyota distributor to embark on the new business model. Alistair Davis says it is not a global decision. “Every country is exploring options but there is a lot of interest in what we are doing. There is a revolution coming in the way cars are driven and owned and so on. New Zealand is a small market and while we are further ahead on the integration of strategies for this, in terms of capital we are still a small player.”