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Here is a summary of the main changes being made by Toyota NZ by appointing its dealers as agents:

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  • For the purposes of selling new cars, dealers are now agents.
  • In terms of all other elements of the business, the franchise dealer arrangement with Toyota is unchanged.
  • Dealers no longer own new car stock for sale Toyota does. Dealers no longer need to fund new car stock.
  • As agents for new cars, the dealers are selling on behalf of Toyota NZ.
  • Customers are buying the car from Toyota NZ, not the dealer.
  • Prices are posted on the Toyota NZ website. Prices are driveaway. The price for any car is the same for any dealer anywhere in NZ.
  • The price will typically be around the transaction price most buyers were paying under the old system of negotiations.
  • Stock kept in three holding areas Auckland, Wellington and Christchurch and delivered to to buyers after the sale mostly in one day.
  • Dealers own the demonstration vehicles which they buy from Toyota NZ at favourable rates.
  • Dealers will have to maintain a complete range of demos so all Toyota models are represented in each dealership. Some models to be available for demo from a pool.
  • Number of demos held in NZ dealerships to double.
  • Dealers cannot sell the demonstrators for at least three months or more.
  • Toyota NZ to encourage 24-hour test drives.
  • Dealers no longer earn a margin on the sale of a new vehicle. They are paid a flat fee for handling the transaction which varies marginally between, for example, a Yaris and a HiLux.
  • Volume targets are all but eliminated.
  • Large savings expected for dealers from the elimination of floor plan costs and the elimination of freight costs from swapping cars between dealerships which was “huge”.
  • Modelling shows that with savings on stock holdings and selling fees, most dealers should be more profitable under the new arrangement especially smaller dealers.
  • All dealers now on a common DMS platform.
  • Planning for the move has taken 10 years.

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By John Mellor

Manheim
Gumtree