Hagglers urged to do car-buying homework
Toyota’s new ‘no haggle’ price policy risks driving bargain hunters to rival vehicle dealers.
Toyota could face some backlash from potential car buyers over its decision to introduce a ‘‘no haggle’’ policy.
Dr James Richard, of Victoria University of Wellington’s school of marketing and international business, says some hagglers will take their money to other car dealers, if they can no longer negotiate.
‘‘There is a group of people who like to haggle, period, and there may be some that just say, ‘Oh well, it’s not even worth talking to them … It’s not for me, I want to go haggle,’ and they’ll go elsewhere. [Toyota has] put themselves in a position that’s not optimal for them.’’
Toyota New Zealand recently announced that its car dealerships would become agents for the company, rather than being the middleman, in turn cutting the price of all new vehicles by up to $10,000.
As a result, there will no longer be any negotiation over what customers pay.
Richard said when businesses made declarative statements, they were at risk of losing some customers, while others would enjoy a hassle-free deal.
However, for the ‘‘no haggle’’ policy to work, Toyota would have to offer something more than a price discount, Richard said.
‘‘At the click of a button, I can find a better price, so they’ve got to be offering something more than price – otherwise it’s not going to work,’’ he said.
‘‘Part of getting a competitive advantage is being able to offer to customers something that is hard for others in the industry to offer.
‘‘Sometimes it can be as simple as telling the truth, it can be as simple as little services that augment, or maybe it’s a free car wash, but it’s the little things that people will think, ‘Oh yeah, I see the value in that,’ and no-one else is offering it.’’
Slow start expected
Toyota NZ chief executive Alistair Davis said the move would draw more buyers. However, he expected the first months of sales to be low.
‘‘I suspect the first month won’t be particularly good … but we wouldn’t be doing it if we didn’t think this was a good thing. Everybody loves a deal; however, the majority of customers don’t enjoy the process,’’ he said.
‘‘There will be some who say, ‘Oh, I’m a great negotiator,’ and they’ll be disappointed, but I think at the end of the day, the customer is more interested in what is the product they get and what’s the value to pay for it.’’ Toyota’s 51 dealerships around the country will stock cars for demonstration, but no sale stock. Customers must order online, or via the dealership. The vehicle will then be delivered to the customer from one of three warehouse hubs in Auckland, Wellington, and Christchurch. Consumer NZ head of research Jessica Wilson said buyers should still shop around, as they should before any big purchase. ‘‘Don’t go to the dealer unprepared. Compare the ‘no haggle’ price with prices you can negotiate for a similar car at a rival dealer.’’
AA motoring adviser Cade Wilson said Toyota’s fixed pricing could mean a boost in sales for small-town dealerships, as it would remove the need for buyers to travel to a big city to get a better deal.
‘‘Time would certainly tell if those in the hunt for a better deal than advertised feel strongly enough to change their preferred manufacturer based on price.
‘‘However, Toyota research suggests the right vehicle for the customer’s needs seems to trump a better price mentality.’’
Toyota’s decision to move to a no-price negotiation model had been 10 years in the making. The company made the final decision to go ahead with it in 2014.
Human contact
Clive MatthewWilson, editor of car review website Dog and Lemon Guide, said many of Toyota’s older customers would not ‘‘take kindly to be told they have to shop online’’.
‘‘Old people are looking for practical purchases to last them for the rest of their lives. They love Toyotas and they’ll be attracted to the idea of low-pressure sales.
‘‘However, older people are used to calling into car dealers and they expect the car dealers to have stock on hand. They tend to be less happy with having to go online and book the viewing of a car. They prefer human contact.’’ Meanwhile, the younger generation would be wary of the fixedprice deals, he said. ‘‘Younger customers simply chase the lowest price, with quality being less important. Clearly, Toyota has assumed that it can’t win on price, so it is simply ignoring customers that want to negotiate.’’ Toyota’s new business model pointed to the future of car retailing, Matthew-Wilson said. ‘‘The commercial car yards of the near future are likely to be giant warehouses that many customers will never physically visit. Instead, the customer will sit at home and be treated to multiple views of the car online, together with access to things like prepurchase reports.
‘‘Test drives, when they happen, will probably be on a small, private road out the back of the wholesaler.’’
Local warehouses might also soon ‘‘be a thing of the past’’ for new car buyers, he said.
‘‘In the next few years, when you buy many brands of new cars, you’ll probably have the choice of making your order online with thousands of options, such as red upholstery or larger tyres. This order will then be dispatched automatically to the factory, and your custom-built car will arrive a few weeks or months later.
‘‘This system is not some future dream – it’s here-and-now technology. At present it’s mostly used for prestige cars, but soon, after a quick test drive at your local agent, you’ll probably be able to order your cheap Chinese-built car entirely online.’’
Market leader
It seems Toyota dominates the market by a mile. Last year, Toyota was responsible for 20 per cent of all new vehicle registrations, according to the Motor Industry Association.
Toyota’s nearest competitor is Ford, with 11 per cent.
Toyota registered 32,282 cars, while Ford registered 16,827.
The most popular car sales for 2017 were the Toyota Corolla, with 7797 sales, and the Toyota Rav4, with 4629.
This was followed by the Kia Sportage, the Mazda CX-5, the Mitsubishi Outlander and the Toyota Highlander.
This is a reflection of the vehicles bought by rental companies, which favour the Toyota Corolla, the Toyota Highlander, the Toyota Rav4 and the Ford Focus.