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Toyota sales slump in wake of ‘Drive Happy’ price policy

on November 8 2018 | in Industry news, Latest news | by | with Comments Off

Leaked documents show sales of new Toyota vehicles plummeted by an average 35 per cent across the carmaker’s New Zealand dealer network immediately after it introduced its ‘Drive Happy’ fixed pricing policy on April 1this year.

Sales at 12 of its 23 nationwide outlets – Toyota ‘agents’ under the new regime – dropped more than 40 per cent in the three months after Drive Happy took effect. The remaining 11 were down between 6.0 and 38.0 per cent in the same period.

Auckland’s Albany Toyota was the worst hit, its 116 sales in April/May/June down 53 per cent on 248 in January/February/March. In other words, its sales slumped from an average 83 vehicles a month in the first quarter to 39 in the second.

The second quarter performance of another high profile dealer, Auckland City Toyota, also suffered, down 46 per cent, or 243 sales against the first quarter’s 454. That’s a fall from an average 150 cars a month to 81.

The drop in April numbers especially can’t necessarily be blamed on Drive Happy – sales in the first month of the new financial year are pretty much always down on those in March, when dealers rush to boost end-of-year figures.

But the documents show that almost all of the Toyota outlets sold fewer vehicles under Drive Happy than they did before it was introduced.

Some were down between 10 and 25 cars a month – in a year where overall new vehicle registrations are running almost 2 per cent up on the same period in 2017.

The dealer/agent that suffered least under the first few months of Drive Happy was Ebbett Hamilton, its 138 sales for the second quarter down 6.0 per cent on the first quarter’s 147.

At the launch in March of Drive Happy, Toyota NZ managing director Alistair Davis called it “the biggest change (to the way cars are sold) in a century.”

Drive Happy abandoned the recommended retail price (RRP) of a new Toyota and replaced it with a haggle-free Toyota Drive Away Price (TDP) fixed by Toyota NZ itself.

Franchised Toyota dealers became defranchised agents operating ‘stores’ for Toyota NZ. The traditional stock of new models was replaced by extra demonstrators.

Sales staff became “vehicle consultants” and “product experts.” Once a ‘consultant/expert’ in a ‘store’ secured a sale, the vehicle was delivered to the buyer from one of three Toyota storage centres, or hubs, in Auckland, Wellington, and Christchurch.

Critics – including some Toyota dealers – say Drive Happy has removed much of the banter with customers that sales staff thrived on, and that the process of selling a new Toyota has become distant and impersonal.

Results for the July/August/September third quarter show sales are improving as Drive Happy beds in, although every dealer except one was still someway short of first quarter numbers.

The exception was Ebbett Hamilton, its third quarter numbers up almost 38 per cent on the second quarter and 30 per cent on the first.

On the other hand, Albany Toyota’s third quarter sales of 158 vehicles were up 36 per cent on the second quarter’s 116, but down 64 per cent on 248 in the first quarter.

Toyota’s agents ranked in sales (first, second, and third quarter numbers in order) were:

  • Manukau (Auckland) – 442/316/398
  • Auckland City – 454/243/337
  • Rutherford and Bond (Wellington) – 400/214/290
  • North Shore (Auckland) – 352/212/269
  • Hawkes Bay (Napier/Hastings) – 337/200/292
  • Miles (Christchurch) – 313/186/266
  • Manawatu (Palmerston North) – 238/173/189
  • Pacific (Tauranga) – 204/136/185
  • Albany (Auckland) – 248/116/158
  • GWD (Invercargill) – 206/133/166
  • Ebbett (Hamilton) – 147/138/190
  • Cooke Howilson (Dunedin) – 161/105/108
  • Rangiora (North Canterbury) – 111/89/113
  • Northland (Whangarei) – 129/77/92
  • Tasman (New Plymouth) – 132/69/96
  • Bowater (Nelson) – 134/72/96
  • Blenheim – 84/53/64
  • South Canterbury (Timaru) – 81/48/65
  • Valley (Thames) – 49/42/56
  • Wanganui – 57/35/40
  • Prescott (Otorohanga) – 58/30/35
  • Coast (Greymouth) 42/24/36
  • North Otago (Oamaru) – 33 sales over six months April-Sept

Meanwhile, the Motor Industry Association (MIA) reports that Toyota has recorded its strongest month for new vehicle registrations.

The long-time NZ market leader registered 4998 new vehicles in October, for an unprecedented 30 per cent share of what was an overall record 16,670 registrations for a calendar month.

Of Toyota’s 4998 total, 3129, or 63 per cent, were rentals: 1539 Corolla, 814 RAV4, 262 Highlander, 173 Yaris, 157 Prado, 103 HiAce, 81 Camry.

 

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