BRUSSELS - Toyota Motor Europe has notified all 3,700 of its dealers that their contracts will be canceled at the end of next year and about half will not be re-appointed.
By the end of 2001, Toyota hopes to have about 1,900 dealers in Europe. But the consolidation doesn't mean all the remaining 1,800 outlets will be eliminated, said Juan Jose Diaz Ruiz, executive vice president for sales and marketing.
Toyota is urging smaller dealers to set up partnerships with larger dealers in their sales territory, he said. The small shops would continue to service vehicles and take customer orders for new cars. But they would no longer order new vehicles from the factory or keep them in stock, Diaz Ruiz said. That will be the responsibility of the main local dealers who would share the profits on new cars sold by their partners.
'We are not buying out any dealers. The reductions are being done in consensus with the dealers,' Diaz Ruiz said.
The dealers who are re-appointed will be reorganized into four regional sales areas: southern Europe; the German-speaking countries; Scandinavia; and the United Kingdom zone, which will include Belgium, Holland and Ireland. The trouble with having 3,700 dealers is that smaller stores are unable to handle the brand's expanding model range, Diaz Ruiz said.
Under the new structure, the central dealer will order and maintain demonstration cars and provide them to partners as needed.
'The partners will take care of owners' cars and be part of joint or cooperative advertising campaigns,' Diaz Ruiz said.
The reorganization is part of a larger program to change Toyota's brand image in Europe and boost sales from about 600,000 this year to 800,000 units, he said. A similar program is under way for the Lexus brand, which also is setting up dedicated dealerships.
FEWER, LARGER DEALERS
The changes are an effort to improve customer care and attention, Diaz Ruiz said.
'In the future, the cost of doing business - especially the cost of information technology and training - will be so high that we need to restructure the organization and end up with fewer and larger dealers that are able to invest in the new technology.'
Toyota wants dealers to sell an average of 400 to 500 vehicles a year, he said. The average currently is about 160 cars per dealership.
The central dealers will be required to upgrade their showrooms in line with a new prototype that he said will make the stores 'more functional and open,' Diaz Ruiz said. About 100 of the larger showrooms will be built in major metropolitan areas.
Diaz Ruiz said the new larger dealers also will be required to set up a Web page linked to a global Toyota Web site.