Toyota NZ’s radical retail revamp
Toyota NZ boss says this is the biggest-ever change in Kiwi auto-retailing. By David Linklater.
Starting this month, Toyota New Zealand has slashed thousands of dollars off its retail prices – permanently – as part of a radical revamp called Drive Happy.
The outline of the programme was announced in March, but as business opened on April 2 the full extent of TNZ’s ‘‘no haggle’’ pricing became clear.
Recommended Retail Prices (RRP) are no more, replaced by a single non-negotiable nationwide Toyota Driveaway Price (TDP) on all models that includes the vehicle, registration, a full tank of fuel, floor mats, 1000km of Road User Charges (on diesel vehicles) and the Toyota Care Service Advantage, which caps service pricing (depending on model) and can give customers an extended warranty after three years if they service with an authorised Toyota centre.
No-haggle TDP prices are substantially lower than the old RRPs, although they are close to what customers have previously paid post-discount – what is often called the ‘‘transaction price’’.
A few examples: a Highlander GX is now $54,990, a reduction of
$9900 over the previous RRP. A Hilux 4x4 SR5 double cab has dropped from $62,990 to a TDP of
$53,490 (down $9200). A RAV4 GX
2WD is $32,990 ($5000), the Corolla GX $27,990 ($5300) or a Yaris SX is now $23,990 ($1500).
Two brand-new Toyota models, the Camry sedan and Prius Prime plug-in, are also launched this month with TDP from the outset.
TDP is just one element of the Drive Happy project, which brings a radical revamp to the way NZ’s biggest automotive distributor sells cars.
‘‘We are changing the way the Toyota business operates in NZ,’’ says TNZ chief executive Alistair Davis. ‘‘We’re moving to a transparent, consistent approach.
‘‘This could be one of the biggest changes in distributor auto retailing in this country – maybe in the world. It’s certainly the most significant by a market leader, rather than a new entrant or a minor player.
‘‘It’s one of the most integrated, in doing a lot of stuff all at once.’’
Here’s what you need to know about Drive Happy. As outlined above, TNZ prices are now lower to reflect what was previously paid post-discount - but they’re fixed across the country, with no haggling permitted.
TNZ is of course a company with a huge stake in fleet and rental markets and to answer the obvious question - yes, those buying in bulk will still get vehicles cheaper than TDP. There’s a discount structure long used for fleet customers based on what type and how many vehicles they buy, and that will be applied to TDP.
Nor does TDP apply to accessories, which represent huge business for Toyota. There are RRPs for those, but ultimately it’s up to the individual dealer.
Did we say ‘‘dealer’’? Sorry, those don’t exist any more. Toyota outlets are now called ‘‘stores’’ and salespeople have become vehicle consultants, product experts or store concierges.
The idea is to get rid of the ‘‘hard sell’’ associated with traditional dealerships.
‘‘The hard-sell is caused by two things,’’ says Davis. ‘‘First, the dealership has a stock of cars they want to get rid of. Second, the salesperson needs to sell a car to pay their mortgage.’’
TNZ’s solution is to take all new-vehicle stock out of dealerships and locate it in three hubs: Auckland, Wellington and Christchurch. Vehicles are only sent to stores when a customer has decided to buy.
‘‘Dealers have an average of 50 cars in stock,’’ says Davis. ‘‘With the vehicles in a pool, a customer [at any store] will have the choice of a thousand.’’
With dealerships acting under an agency model and being paid a fee to sell a car rather than a margin, TNZ says the idea is that there’s less question about the motivation of staff to make the sale. Consultants can earn bonuses by making customers happy - as determined by post-sale surveys.
Davis acknowledges that some staff will still be on commission,
stores are all independent businesses, but says that the reward structure is definitely shifting.
‘‘We reward our dealers [stores] for satisfied customers now, so there’s a flow-down effect.’’
While there will be no stock at stores, there will be an increased number of demonstrators for customers to try, enabling more flexible test-drive options.
The number of Toyota demonstrator vehicles is being doubled nationwide to around 750 - an average of 15 per store, although naturally smaller centres will have fewer and large outlets more.
It’s expected that test-drive periods will range from the oldstyle 10-minutes-around-the-block to up to 24 hours, depending on availability of the vehicle - and at the store’s discretion.
There’s also a ‘‘buyer remorse’’ clause in Drive Happy that enables a buyer to return a car within seven days if they feel they’ve made the wrong choice providing it’s in as-new condition and has less than 500km on the clock.
TNZ chief executive Alistair Davis
TNZ has upgraded its website and now allows customers to research, build and price a particular vehicle online in great detail and at a known price that will apply anywhere in NZ.
They can take their digital vehicle to any store and use that to further streamline the buying process. Davis calls this the ‘‘perfect car’’ builder.
TNZ is not yet ready to sell cars entirely online - although it did experiment with that a few years ago, with Prius - but Davis says the TDP system makes this a lot more feasible in the future.
Nor are there any plans to downsize the dealer, sorry ‘‘store’’ network or its staff.
‘‘They are a vitally important part of the sales process,’’ says Davis. ‘‘They offer a local presence for our brand, an economic presence for their communities, and a human presence for customers.’’