Toyota seeks a home on the range for Tundra

MADISONVILLE, Texas -- If Toyota is going to double the sales of its new Tundra full-sized pickup, it will have to make hay in rural small towns like this one.Madisonville is home to a Wal-Mart, several fast-food restaurants, feed and tractor stores, a few banks and a population of just over 4,000. About 250 miles northeast of the new Tundra assembly plant in San Antonio, the town is the prototype for Toyota's new "rural opportunity markets." After 50 years of concentrating on metropolitan areas, Toyota is ramping up its rural representation. It plans to dot the countryside with satellite sales and service outlets owned by dealers in larger markets. The program is in its pilot stage. But Toyota's aim to make the redesigned Tundra a big player in the large pickup market hinges on its ability to connect with farmers and ranchers. Paul Atkinson opened Toyota's first satellite store here in July. The 52-year-old Atkinson owned a Chrysler store, then a recreational vehicle dealership, before opening Atkinson Toyota in Bryan, Texas, in 1999. He has done well by Toyota. His mid-sized operation has a company plane and Atkinson owns a 460-acre spread outside Bryan. So with the Texas-built truck in Toyota's pipeline he was willing to take a chance on Atkinson Toyota Madisonville.Indeed, the Madisonville store would have never happened if an existing dealer had not raised his hand.Seven Toyota dealerships ringed this vast swath of east-central Texas, but there was a hole in the rural middle. Normally, an outlet in a small town such as Madisonville, which is about midway between Houston and Dallas, would be financially impractical. But the store that Atkinson has plunked down here as a satellite to his large dealership in Bryan, 40 miles away, could prove a winner.Store needs a motherAll of Toyota's rural opportunity market stores will be branches of bigger stores, but they will be full-service operations. "Could we have done this without the mother store? No way. It never would have made it," Atkinson said in an interview. "You can't build a store like this and expect to make a lot of money," he said. "Can I make this work? I look long term. I'll tread water until the new Tundra arrives."Atkinson will get his new Tundras at the same time as everyone else -- in February. Currently, Toyota's rural ambitions are small-scale. Including Atkinson's store, the company is studying 50 other rural pilot stores around the country. But only five, all in Texas, have signed letters of intent. If those are successful, Toyota may add more rural opportunity market dealerships in other states with vast remote areas, such as Montana, Kansas and the Dakotas, said Don Esmond, Toyota Motor Sales U.S.A. Inc.'s senior vice president of automotive operations. "We do well in the smile (coastal) states, but our growth opportunities are in the Midwest," he said. Outflanking the domesticsIn the 40-mile radius market area that encompasses the Bryan and Madisonville Toyota dealerships, there are seven General Motors stores, six Ford stores and five Chrysler group franchises. A different individual owns each of those 18 domestic dealerships. That cost inefficiency is where Atkinson sees an advantage, and the ability to outflank his domestic rivals.Madisonville may be rural, but it is hardly remote. The Toyota dealership is on the edge of town, where I-45 and State Route 190 intersect. That means 50,000 vehicles drive past every day. Already, Atkinson's new store is making a dent. Alongside two rows of 2006 Tundras are a dozen traded-in domestic pickups. Just the same, volumes are modest. Bryan typically sells 150 new vehicles a month; Madisonville sells about 50. That's not enough for the smaller store to go it alone.That's why Atkinson's two dealerships share a sales director, back-office operations, training and information technology. Atkinson renovated the Bryan store while building Madisonville, using the same contractor and many of the same architectural fixtures.Most of the new-car inventory stays in Bryan's bigger lot, but the online inventory list combines both stores. Most of Atkinson's spare parts are housed in Bryan, while Madisonville has a much smaller warehouse. Helping with the babyThe differences between Bryan and Madisonville are as clear as city and country. Bryan does most of its car sales on Saturday. Madisonville might as well be closed on weekends. In Bryan, the Tundra is the fourth-best seller in the Toyota lineup. It is the clear top seller in Madisonville. There's a waiting list for FJ Cruisers in Bryan, but two blue models sit idle in Madisonville. And while shoppers in Bryan often are in buy-today mode, Madisonville customers like to take their time and build relationships.Atkinson says he can't split his time between the two stores on the same day. "I'm all charged up from hustle and bustle of the Bryan store, and Madisonville is more laid back," Atkinson said. "I'd come running in and scare all the people here. So I spend two days in Bryan for every day in Madisonville. I have to have a different mind-set when I come here."Hay-roots marketingThe contrast is noticeable in marketing as well. "Typical advertising isn't going to do it. I need to be more grass-roots," Atkinson said. "I need to be present at the tractor supply, the farms, the feed stores."For instance, when the new Tundra arrives, Atkinson plans to load a trailer with a few tons of hay, take it to the local feed store and demonstrate the Tundra's towing prowess. Atkinson isn't figuring on the Madisonville dealership being a big sales point, but he does see a future in service. Currently, he has four service bays, but he can quickly blow out the back wall to make room for more. "Service is a consideration when you are buying a truck," Atkinson said. "With the Bryan store, people from around here were driving past two or three domestic dealers to get to us. If we get these folks in for scheduled maintenance, we have a customer for life."You may e-mail Mark Rechtin at mrechtin@crain.com

Toyota seeks a home on the range for Tundra

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