TOYOTA’S move to vacate the sub-$20,000 car market and cover the gap with certified used cars has virtually handed the segment once led by the Yaris over to Chinese car-maker MG.

VFacts data for the first quarter of 2021 shows that YTD March Yaris sales have halved while sales of the Chinese-made MG3 have doubled.

Toyota flagged last year that certified used cars are to become a panacea for the brand and its franchised dealer network when it abruptly withdrew from its historically significant sub-$20,000 new-car segment.

The company signalled it would use its reputation for durable cars to fill the price points it once occupied below $20,000 with certified used cars after an abrupt massive price rise for the Yaris – an increase of up to $9000.

As a result, the lowest-price Yaris on the market now is the $22,130 (plus on-road costs) Yaris Ascent. That was previously around $15,000.

The $9000 price increase for its smallest Australian model pushed the Yaris straight into the circa-$25,000 small-car segment price bracket to compete with siblings Corolla and C-HR.

Toyota Australia believes the gap can be filled by used cars prepared through its Toyota Certified Pre-Owned (TCPO) program.

But the effect on Yaris sales has been dramatic and the move by the dominant new-car market leader has clearly opened the door for low-priced Chinese cars to penetrate the Australian market.

In the year to the end of March the Yaris attracted only 1614 buyers – a drop of 45.3 per cent on the almost 3000 Yaris’ sold in the first three months of last year. Yaris share dropped from 25.4 per cent of its segment to 13.3 per cent YTD March.

However the MG3 is now the segment leader selling 3410 units in the YTD March, a rise of 95.3 per cent compared with 1746 units in the same period of 2020. The MG3 now enjoys a 28 per cent share of the segment, up from 15 per cent a year ago.

Toyota Australia sales and marketing director Sean Hanley spoke to GoAutoNews Premium about how leaving the segment will not disadvantage dealers, customers and even itself.

“We see certified used cars as a critical strategy for the future for new customers to the brand and to ensure customer retention,” he said.

“For us, it allows us to step back from the hatchback segment that is shrinking and, to fill the gap, become the catalyst to enhance dealers’ used-car stock of Toyota products and offer affordable Toyota vehicles.”

Toyota has sold more than 100,000 Toyota vehicles since starting TCPO in 2012. Much of the promotion has been subdued but with the vacancy in the sub-$20,000 landscape since hiking the Yaris price, it is becoming an increasingly important activity.

Mr Hanley said more work is being done on TCPO that will be rolled out in future months, but declined to be specific other than saying “you can expect to see a lot more going forward”.

Toyota said the program has demonstrated that buyers of certified used cars will remain with the brand with a reported 15 per cent moving on to buy a new Toyota within five years. It is now aiming to have 25,000 TCPO sales a year.

TCPO criteria includes ensuring that all certified vehicles are less than 10 years old and have travelled fewer than 160,000km.

The certified vehicles are subjected to a 90-point inspection including mechanical components, exterior and interior condition, service records and keys before being cleaned and detailed for the showroom.

They are also checked to ensure they are free from finance obligations and are not stolen or have previously been written off because of an accident, flood or storm damage.

Once certified, the vehicles get a 12-month Toyota roadside assistance membership and the statutory warranty.

Buyers can also choose finance options including Toyota Access which has a guaranteed future value that reduces the repayments.

By Neil Dowling By John Mellor