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Toyota NZ no-haggle policy ‘working’ despite sales slump

By Barry Park, 10 May 2018 News

Toyota NZ no-haggle policy ‘working’ despite sales slump

An experiment to see if buyers are prepared to pay fixed, all-in prices for cars doesn’t pay dividends in April

TOYOTA New Zealand claims its controversial experiment with haggle-free pricing is delivering the goods, despite a big slump in sales in April.

The brand, which last month introduced fixed prices for its showroom products as part of a rationalisation of the way it does business in the island nation, said the Drive Happy Project was “still on target” after posting just 1310 passenger car sales, and 712 commercial vehicle sales for April. The result was 26 percent lower than April last year.

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“We expected a significant dip in sales for April,” Toyota New Zealand chief executive Alistair Davis said in a statement released to Wheels. “Transitioning to a new way of doing business is not going to happen overnight, or even in one month. We are in this for the long term.”

Davis said buyers still needed to get used to the idea of driveaway pricing for all new models in showrooms – some at up to $10,000 less than the previously negotiable list price and much closer to what the industry calls the transaction price – the dollar amount the customer actually pays for the car once the haggling ends.

The fixed price quoted includes delivery costs, number plates, registration, a full tank of fuel, floor mats, 1000km of NZ-specific road user charges on diesel vehicles and a seven-day money-back policy if the customer is not happy with the vehicle.

The timing of Toyota NZ’s big shift in the way it sells cars coincides with the end of the Japanese financial year, with higher sales traditionally recorded in March as dealerships clear their books of inventory ahead of the new financial year. “We had a good March, with Toyota stores contributing to this as they increased their demonstrator fleets as part of the Drive Happy Project,” Davis said.

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He said April was also traditionally slower for fleet, rental and lease buyers, a factor that was also hurting numbers for a brand that traditionally commands one in every five of NZ’s new-car sales.

Toyota has completely rationalised the way it does its business in NZ, introducing a system it claims dramatically improves the customer experience. Dealers are now known as “agents”, and dealerships have become “stores” as the new model ditches sales commissions – the industry-wide incentive used to encourage new-car sales staff to close a deal – for a salaried job.

It is not known if the project is being considered for other Toyota markets globally.

Toyota Australia said NZ had different market conditions and regulations compared with here, although it was “looking at their [Toyota NZ’s] work with great interest”.

“It is quite a revolutionary change and approach to the selling of vehicles,” spokesman Orlando Rodriguez said. “We have no plans to go down this path here in Australia at present, but would definitely look at the impact of some elements of this change that could be adopted to give our customers a better experience at every touchpoint they have with us during their ownership experience.”