This is a big year for Toyota. After a strong 2005, several new products are on the way, including a redesign of the best-selling Camry. Toyota also is entering new segments with the FJ Cruiser SUV and Camry Hybrid.
Toyota dealers have been investing heavily to be ready for the continued influx of new customers to the franchise. Toyota already has the highest sales-per-dealer figure in the industry, so dealers' sales, service and parts departments are under strain and have to grow.
Helping dealers maintain a working relationship with Toyota as the franchise grows is Steve McDaniels, chairman of the Toyota National Dealer Advisory Council. McDaniels spoke in December with Staff Reporter Mark Rechtin.
What is Toyota's hot product? What's not?
Toyota has a great deal of hot products. The Prius is extremely popular, and all the Scions are hot. Corolla and Camry are hot. Our larger vehicles with larger engines, such as the Sequoia and Land Cruiser, are not as hot, but we expect a turnaround when fuel prices stabilize a little bit.
What new products are on the way?
Toyota really has an incredible number of new vehicles. The RAV4 is coming with a totally new design and increased production. Then there's the Camry redesign and Camry Hybrid. The FJ Cruiser will be spectacular, and the Yaris will do well. An all-new Tundra will be coming at the very end of the year. This is going to be a very exciting year.
What are the dealer council's top three concerns?
I want to see long-term, profitable growth for the dealer body. Toyota needs to provide the right amount of vehicles necessary for all dealers to grow. We are all making massive investments in facility improvements and human resources, and that needs to be met with extra vehicles. Toyotas are in high demand worldwide, and we want our fair share.
Toyota needs to continue to provide us with the highest-quality vehicles in the world but with styling that evokes passion.
Toyota needs to continue to price its models aggressively and at the heart of the market while maintaining industry-leading dealer margins.
Does Toyota listen to its dealer council?
Toyota is committed to the dealer council process. Their willingness to address our concerns is exceptional, and we are appreciative of that.
How satisfied are dealers with Toyota?
My sense is that there is a strong mutual respect between Toyota and its dealers. There is always room for improvement, but the partnership is strong. It's a good time to be a Toyota dealer.
Do you agree with Toyota's pricing strategy and margins?
Yes. We just need to continue to provide customers with the best possible value, and Toyota needs to provide margins so we can grow and reinvest with them.
Are Toyota dealers making money on new-car sales?
Yes, but not as much as we would like. There is always room for improvement in that area. Toyota understands that a profitable dealer body is necessary. We continue to challenge them to understand their impact on dealer profits.
Are there any segments Toyota is missing?
I don't see any significant segments we are missing. I am hoping we will bring back a sports car to re-enter where the Celica and MR2 left off.
How many of your customers ask about hybrid vehicles?
More and more every day. It is becoming more mainstream. We get constant questions, people questioning whether a hybrid is right for them.
How important to consumers are safety features compared to other vehicle attributes, such as styling and performance?
Safety is always a paramount concern. Customers demand and expect the safest vehicles and want all those features. Toyota is focused on that for their future products as well.
Toyota likes to talk about how low its inventories are. Would you like to see them crank up production so you could sell more vehicles, or are you OK with their demand-driven distribution process?
We always are discussing how many cars is the right number to have. Sometimes demand has outstripped supply, and we are all fighting for product. One too few is better than one too many, but two too few is a disaster. We just need to be able to continue to grow.
How are dealers reacting to the Image USA II program?
The dealers understand the need to have first-class and easily identifiable facilities. Nationwide, we are investing heavily. Toyota dealers are spending $800 million in 2005 and $1 billion in 2006. That's a strong show of support. But there will always be legitimate concerns about facility design to recognize our own needs and ability to get a return on investment.
Does Toyota have enough metro dealerships?
Toyota's business model has proven to be successful. They don't need more dealerships; they just need the best dealers in the industry. To ask a metro dealer if there need to be more metro dealers, the answer is always 'No.' Just teasing.
What do you think about Toyota's plan to place some satellite dealerships in rural markets?
That will be a small number of dealers in remote areas. It's not designed to work toward more metro dealers. It's for small service and retail points, especially with the new Tundra coming.
How many oil sludge complaints have you had? How many complaints about Sienna run-flat tires have you had? Is it much ado about nothing, or do these customers have a leg to stand on?
I am not seeing a change in quality. The oil sludge issue was addressed four years ago, and Toyota supported their customers. That was more a design issue than a quality issue. Tires are always a sensitive issue for customers because the warranty resides with the tire manufacturer, and we've encountered some problems with that. We have resolved all those complaints. Every customer issue is important to us, because our future depends on satisfying those issues. I think Toyota quality is the best in the industry. We want to make sure it stays there. If we see spikes in recalls or policy adjustments, we always will address those right away. Product quality for Toyota is what customers depend on.
Now that Scion has a year or so under its belt, do you see the customer demographic shifting?
I still think it's the youngest demographic of any brand. About 75 percent are new to the Toyota showroom floor.