Q&A: Toyota's new German boss plans to reduce dealer network

Cologne. Markus W. Schrick, who has been responsible for Toyota Germany since May 1, speaks to Automobilwoche about the future of the dealer network and the Toyota brand.

What are your plans for Toyota in Germany?

Toyota is on the right track. Our products are high quality and customer satisfaction is also high. This also regards the quality of our dealer network. My principle is: "Do something good and talk about it." In future we have to communicate our success more intensely and more emotionally.

In 2002 your dealer network consisted of 680 locations, 330 of which were direct- and group-dealers and 350 were partners. What is your dealer strategy?

By the end of 2003 we will have 630 locations. We will have 280 direct dealers and 350 partners. Approximately 50 dealers will not have their contracts renewed, as they are unable to comply with our future standards. By 2006 at the very latest the number of direct dealers will be reduced to approximately 120 large dealers. The total number of locations will then be a maximum of 650. By then the network within cities and other congested areas will have to be increased substantially.

Which locations will you focus on?

We will have new, representative dealers in Dusseldorf and Cologne and will open another new building on the Hanauer Landstrasse in Frankfurt. Hamburg, Hannover and Dortmund will be next.

According to press reports you are planning to replace more than half of your 50 Lexus dealers with experienced premium dealers.

Those reports are not right. The truth is that Toyota is increasingly trying to separate the brands within the European market and that it chooses its Lexus dealers according to the individual case and the area concerned. There are no preferences for existing dealers or dealers of other premium brands.

Larger dealers in larger cities: will the return on investment also increase?

That is our aim. The average return on investment in 2002 was 1.8 percent. Our aim is 3 percent. By 2005 a Toyota dealer's minimum annual sales target should be 1,000 units.

Which means that you will have to sell a few more vehicles.

That is right. We are hoping that in 2003 our annual sales in Germany will increase from 103,000 units to 107,000 units. By 2010 our sales target will be 200,000 units.

Is that a conservative calculation?

I assume that in 2003 the total market will fall to 3.2 million automobiles. It is anything but conservative if at the same time we grow by 4 to 5 percent. There is still a lot of potential, specifically in Germany. No matter how the market will develop, we are hoping to continuously increase our market share. Toyota is still a very underestimated brand.

You will need to convince your customers of that.

The demand for the new Avensis is proof that we are already doing so. The number of orders is 30% above the estimate. In future the brand will become even more emotional. We need to accentuate that we are far ahead of many others regarding quality and safety. We are also increasingly targeting younger buyers. The average age of a Toyota customer is currently 49 years. We therefore have to focus on winning over younger target groups.

How?

We have to inform potential customers of our top-quality products -- by organizing events or giving them the opportunity for extended test drives, as the ones we offer with the Lexus IS-Challenge. We will also focus on our niche-products: Land Cruiser, Celica or MR2 roadster, our fun-models. Another focus is Formula One.

Your two racing models have not been doing too well so far.

We have already collected some good points. You should not forget that firstly we have only been in the racing business for two years. Secondly we are the only ones, beside Ferrari, who have kept the Formula One business within the company. We have to make that clear to our customers. That is why we will advertise the subject further in order to bring it closer to potential buyers.

Will you increase your total marketing expenses?

In comparison to 2002 by 20 percent, regardless of the fact that the general advertising market has decreased by 2 percent.

Can you tell us more about the new models you will promote in future?

The RAV4off-roader will be restyled in 2003. By the end of 2003 we will launch the new Prius, a car with improved hybrid-technology and a fresh design. In 2004 a redesigned Avensis Verso will enter the market. And there will also be a surprise to look forward to. At the beginning of 2005 there will be a new addition to our model range: a car smaller than the Yaris.

What about Lexus?

We have just launched a new RX 300 and will introduce an improved LS by the end of 2003. From 2004 we will focus on the models IS and GS. Lexus will also use our hybrid-technology. The RX 300 with hybrid drive will combine the performance of a V8-engine with approximately 300hp and the consumption of a mid-range limousine. From 2005 a Lexus diesel will also be available -- an in-house development. This will have a great effect on Lexus sales.

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