Ron Napoli Sr. enjoys being on Toyota's National Dealer Advisory Board so much that he is on his second swing through the ranks. He has been chairman before, during the last year of his term from 1985 to 1989.
Now he's back in the top job, keeping the factory abreast of Toyota dealer concerns.
Not that there are many complaints. Profits are high, days' supply is low and the factory listens. It's as strong a franchise as could be hoped for, says Napoli, who owns Toyota North in Mount Kisco, N.Y.
Napoli was interviewed by Staff Reporter Mark Rechtin.
How was the past year for Toyota dealers?
It's definitely been an excellent year.
What are the prospects for the industry in 2004?
I think it will be better than 2003. There are more new products coming out. The manufacturers are getting involved in broadening their product lines to appeal to a greater range of customers.
We've seen a lot of migration out of passenger cars and into SUVs and derivatives thereof. More manufacturers are competing in that arena, and that means more activity and traffic for dealers.
Interest rates hopefully will remain low, which has helped the dealer and customer keep the cost of money low for retail and wholesale.
It's been a great time for customers to come into a dealership. They can afford more car than six or seven years ago.
Where do you think incentives are headed?
I think we will see fewer incentives in 2004, and the manufacturers who are reliant on that will realign their thought process.
What does 2004 hold for Toyota?
I see another outstanding year for Toyota.
We have exciting product like the Prius, the continuation of Sienna, the launch of Scion to more parts of the country and just the breadth of product line that we have.
There are 17 Toyota and three Scion models, and hopefully there will be more availability of Prius because it is becoming a mainstream automobile.
Not only are we seeing increased opportunities in new-car sales, but also in parts and service.
What is your hot product?
Without a doubt, in terms of sales to availability, it's the Prius.
Even with increased expectations of availability, the demand is still outpacing supply, and that won't change until the second or third quarter of 2004.
But all the SUVs have been doing well, too, and the low-days'-supply vehicle is the Sienna, especially the high-line all-wheel drive models here in the Northeast.
Prius has zero days' supply and Sienna is 10 days' supply, if that.
What product needs help, or should be cut from the lineup?
The low-volume cars like the MR2, Celica and Echo are hard to support because they are not in the mainstream.
But it's a production adjustment, so we still have them for people who want to have them. It's not something that needs to be overly incentivized, it's production-controlled.
Do your dealers have the right product mix and overall marketing strategy to be successful? Or are 20 products too much to ask for Toyota salespeople to be expert about?
The challenge with our sales force is that Toyota needs to provide the tools to have our salespeople product-knowledge trained and certified.
The best salespeople will take the time to learn, and it's the key to their success. It's hard to stay on your toes when you have more than a few products. That's where the emphasis needs to be.
How many SUVs is too many to offer?
I think each is distinctive. There really isn't that much overlapping, and I see it as no different than Corolla to Camry to Avalon. We have different sizes for different purposes. You need to have that product selection.
Are you buying into the Scion franchise? Are you building a stand-alone building, or will it be part of the Toyota showroom?
It's within the showroom we already have. I am dedicating 500 square feet of a 22,000-square-foot showroom. You need about 400 square feet to do it.
So far it's going very smoothly. While we may have 15 salespeople willing to sell Scion, we are going to make sure they understand the philosophy and the process. We will not have exclusive Scion salespeople; they will work both sides of the fence. I am anticipating selling about 250 Scions a year, including the third model.
Do you see Scion as a purely California phenomenon, or can it extend to the rest of the country?
I think it will extend. The xA, xB and tC are unique enough, especially the xB. We won't just attract the Scion customer, but also some mainstream Toyota customers who like the value and like that it's a different product. These will be people outside the traditional business plan.
Something like 60 percent of Scion buyers are new to Toyota showrooms. And some of those new people may not buy a Scion; they may buy a Corolla or Camry instead. But the key is that you're selling yourself and quality and the product, not the deal.
Do you think Scion can draw in younger buyers to the Toyota family? Or are the products so quirky that Scion buyers will be "one-and-done" before they move onto the next quirky thing?
That's the challenge with anything. It's no different with someone who bought a Corolla or Celica years ago.
Toyota has made the investment and has so many more models than we had 30 years ago. With Scion, it will be product, people and process that make the difference. Certainly the product needs to stay fresh in the marketplace.
I am confident there will be a commitment to having product in the forefront.
If Toyota is lagging in any area, it would seem to be in customer satisfaction measures, where it has consistently done poorly in J.D. Power surveys. What are you doing about it?
There is no one reason why our scores are below average. It all comes down to focus, whether on the process or whatever.
The tools we are given with a new survey system is getting us more information to make an adjustment where improvements need to be made.
Also, Toyota has a voluntary "signature" process to make an investment in the future in how cars are sold and the customer is handled. The majority of dealers want to take care of the customer, otherwise you are just living for the day.
Are dealers making money on Toyota new-car sales?
I would say overall they are. You are in a competitive environment, and we're selling volume. It's a game of averages.
The last 20 group statements I saw, every dealer was profitable in the new-car department.
Is factory advertising an issue for the dealer body? How much input do you have into this advertising?
There's a dealer council meeting with the marketing department. There's input from dealer advertising associations to the marketing people about the events like Toyotathon and also to see what's in store for us. We're not involved in the creative process - everyone thinks he's an expert in advertising, but we don't decide what's going to be shot and what's going to be said.
How important is the Internet to dealers handling Toyota? What could the factory do to help with this?
Toyota's perspective and the dealer perspective is that it's an area of tremendous opportunity for Toyota. We get 1 million hits a month on Toyota.com.
And we also have the dealer site, the buyatoyota.com site.
Probably 75 to 80 percent of Toyota customers use the Internet to get information leading to their purchase. People still consummate their transactions at the dealerships, but pricing, options, availability, they do it on the Internet. If a dealer doesn't embrace it, he's 10 years behind the times.
What's the most important thing you bring back from the advisory board to your dealership?
It gives me confidence to invest continually for the future.
I've been with Toyota 30 years, and I started with a 3,000-square-foot building for sales, parts and service. Now, we have 80,000 square feet on five acres. Personnel has jumped from 15 to 85. It gives me comfort that we are making the right decisions.
When it's time to take it to the next plateau, you have to be comfortable about investing in the future. Toyota was ranked its highest-ever in the NADA dealer attitude survey, ranked only behind Lexus. That's an amazing accomplishment for a volume manufacturer.