Toyota New Zealand completely revamps vehicle retailing

By Graeme Roberts | 6 April 2018

Toyota New Zealand (TNZ) is in the early days of a new Drive Happy project that has completely changed how it retails cars and how its dealers operate.

The company has introduced a single, nationwide 'driveaway' "transparent" price for all of its models which includes the cost of the vehicle, its registration, a full tank of fuel, the Toyota Care Service Advantage package, floor mats, and 1,000km (600 miles) of pre-paid road user charges for diesel vehicles.

It has also removed all new car stock from dealerships, instead supplying customer orders from three large vehicle hubs in the main cities of Auckland and Wellington in the North Island and Christchurch in the South Island to give customers the widest possible section of vehicles. These are delivered through the local Toyota dealer, now renamed a 'store' where consultants (salespeople) will be remunerated based on how happy customers are at the end of the process - by way of customer satisfaction surveys.

The automaker is also encouraging flexible test drives such as extended, overnight or 24-hour subject to availability of the vehicle and at the store's discretion.

Dealers will continue to operate their used car, service and parts operations as before.

A much improved website includes an online build-your-own tool which allows customers to customise the vehicle they want, in their own time, take a copy of their personalised vehicle to a store to order and start the streamlined buying process. Delivery of the vehicle will still occur at the Toyota store where the vehicle will be serviced.

The Toyota Care Service Advantage removes the uncertainty for customers around future costs of servicing. Included is capped price servicing for four years or 60,000km, four years of AA Roadside Assistance and four years of WOF (safety) inspections. The extended warranty that kicks in if the owner continues to get the car serviced at the store will take the manufacturer's three year or 100,000km to five years or 150,000kms. It is based on the assumption of 15,000kms travelled per year and guarantees the price of future servicing for the first four years of regular use.

TNZ said the new system evolved after years of research that showed that customers disliked haggling over the price of a new car, were never sure they had received the best available deal and often felt pressured into buying a particular car in a dealer's stock, rather than the one they really wanted.

Holding stock centrally takes a huge cost off the store and allows it to supply the exact model the customer wants, taking pressure off salespeople to 'sell from stock'. Instead of stock, stores are encouraged to boost their demonstrator count, which they buy at special rates, so customers can try a greater variety of cars, and stores can also obtain less requested demo cars from a central pool, if required.

Remunerating consultants based on customer satisfaction after the sale takes the pressure off the consultants to sell enough to earn sufficient commission and last minute, end of month pressure on dealers to sell sufficient units to achieve a targeted bonus result.

Salespeople have been re-trained as vehicle consultants, product experts, or the store concierge to help customers select the best vehicle for their needs.

"Buyers have the power in new vehicle purchases," said TNZ CEO Alistair Davis. "They'll buy when they are ready. We have to make the process as easy, transparent and welcoming as possible.

"Our way of business needs to evolve to align with our customers' expectations.

"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 prior to their purchase.

"We're not alone in having made new vehicle purchases a drawn-out affair that takes the gloss off the experience," said Davis. "We've observed and listened to customer feedback and are re-shaping the purchase experience."

See also: Toyota NZ CEO Alistair Davis on changing dealers to agencies