LOS ANGELES -- More than one-third of Toyota dealerships have started upgrading their stores under a factory program launched in September 2004.
The company wants larger stores to handle Toyota's rapidly expanding sales. But the program calls for more than a showroom-and-sign redesign. It includes changes to the service area to accommodate the much-wider Tundra pickup arriving in 2007.
Thirty-three Toyota dealers have completed the redesign and another 450 are in the process. On Jan. 1, Toyota had 801 exclusive Toyota dealerships out of 1,212 total showrooms.
Toyota has the highest sales-per-dealership of any U.S. franchise, at 1,464 units per dealership in 2004. Toyota estimates that per-outlet number will increase by 27 percent by 2008.
"To have better than one-third of your dealer body involved within a year is pretty fast," says Jim Lentz, Toyota Division general manager.
Toyota says the upgrades will cost about $150 per square foot, or $3.75 million for a dealership with 25,000 square feet in showroom and service area space.
That represents about $1 billion spent by dealers this year and $800 million next year, says Al Cabito, Toyota group vice president of sales administration.
Toyota is not providing any money to dealers for the remodeling.
Executives say the plan would allow dealers to handle a 40 percent increase in service business. Toyota now has about 19 million vehicles in operation in the United States. That is expected to rise to 22 million by 2008.
Toyota's new showroom interiors will be divided into areas dedicated to cars, SUVs, other trucks and hybrids. Dealers can decide how much space to give each type of vehicle.
Service area upgrades appear to be high on the list for dealers. The 33 Toyota dealers who have completed their renovations averaged an 86 percent increase in the number of service stalls, Cabito says.
But urban dealers who do not sell many trucks also are expanding because of increased sales. Toyota wants to see dealerships buy more land to handle larger inventories. Many metro dealers, constrained from expanding through land purchases, are building multistory parking lots instead.
Some dealers aren't remodeling because they recently completed Toyota's previous facilities program, Image USA I.
Toyota's staff is discussing future sales and service targets with dealers to see if the current showrooms can handle increased business, Lentz says.
Adds Lentz: "There's not a lot of arm-twisting going on."
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