Toyota Australia rules out fixed price agency dealer model

Australia’s biggest car company has no plans to go down the same fixed-price agency model path as Mercedes-Benz or Honda, and says franchise dealerships remain a foundation of its business.

Reflecting its market dominance and market share of over 20 percent, Toyota has the nation’s largest franchised dealership network in metropolitan and regional areas.

Sean Hanley, the company’s vice president of sales, marketing and franchise operations — himself a former Queensland car dealer — acknowledges that fixed-price business models are trending, but he believes the old ways are still best for his company.

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Centralizing inventory during these times of shortage would have benefits, although at Toyota’s scale this would be very difficult.

However, this is a different tactic than Toyota’s across the ditch in New Zealand, where it operates the agency model.

“Just last week we again made very strong commitments that the agency model for Toyota in Australia and for our dealers is not on track,” Mr Hanley told us.

“Nevertheless… we are blessed to have a very strong relationship of trust with our dealer network, right? And our dealer network is an integral part of our future plans.

“Our Dealer Advisory Board is an integral part of our 10-year plan. In other words, we sit down with our dealers, we talk about our 10 year plan and we talk to our dealer council about what their strategic priorities are and how we align them with our strategic priorities.

“That’s how deep we go. That’s the relationship we have with our dealer network, right? So I can say that because it’s all fact, and you can actually go and ask them. We are talking about agency model. We’re talking about this because it’s happening right now with a few brands in the Australian market.

“So you have these discussions and we made it clear to them. We are not planning an agency model for Toyota and Australia. We made it very clear.”

That’s not to say that Toyota won’t try to evolve the way it sells cars. It’s already selling cars online — which it’s scaled back amid ongoing supply shortages — and is launching its own carsharing service, Kinto. It’s also launching its first electric vehicle in 2023, the retarded bZ4x.

“As we evolve into a mobility company and an electrified, digital, connected company, the future may be very different from our roles 10 years ago,” said Mr. Hanley.

“While we are not planning an agency model, we are telling our dealers – who agree, by the way – that our roles, Toyota distributor and Toyota dealer roles, need to change.”

Toyota previously took a somber view of inflated prices being advertised by some franchised dealerships – as examples of nearly new LandCruiser 300 series being listed with massive markups that ran rampant in the classifieds earlier in the year.

The agency model switch – which puts inventory back in the hands of the OEM and comes with fixed prices and dealer fees – is currently a topic of discussion with Mercedes-Benz and its dealers in federal court over the issue of compensation for the switch.

MORE: Toyota Australia reviewing LandCruiser 300 price-bump concerns MORE: Toyota Australia set to stop scalpers selling in-demand cars at premiums