Toyota NZ ends the haggling

Update, April 9, 2018: Toyota Australia has responded to a request for comment from motoring.com.au with the following statement:

"We can confirm that Toyota Australia has no current plans to adopt the recent changes which Toyota New Zealand has undertaken. However, through existing strategies deployed throughout our dealer network, we are constantly looking at ways to enhance the guest experience within Toyota dealerships. Any changes made within our dealer networks are always done within the rules and regulations of Australia."

Toyota New Zealand has developed a new business model for its retailers, according to online news site, stuff.co.nz.

Effective from April 2, Toyota dealers are selling cars at a heavily discounted price – and including the statutory on-road costs. Even the entry-level Yaris is offered at a price $1500 lower than before, and at the other end of the spectrum, the Highlander GX (our Kluger) is now priced at $54,990 – a reduction of $9900.

A Hilux 4x4 SR5 dual-cab pick-up has dropped $9200 from $62,990 to $53,490. The price of the front-wheel drive RAV4 GX is down by $5000 to $32,990, and the Corolla GX price of $27,990 is $5300 lower.

Part of a consumer benefits program named 'Drive Happy', the new pricing regime converts the previous RRPs (Recommended Retail Prices) to TDPs (Toyota Driveaway Prices). According to the Stuff report, the TDP is non-negotiable, applies nationwide and is implemented on a permanent basis.

Additionally, the deal includes a full tank of fuel, floor mats, Toyota Care Service Advantage (capped-price servicing) and the offer of an extended warranty after the factory warranty expires, provided the vehicle is serviced through authorised Toyota dealers. Diesel buyers are also reimbursed $1000 for 'road user charges'. Toyota admits in the report that the TDP in each case is around the average transaction price paid previously.

The new business model is introduced with the launch in New Zealand of the new Camry and a plug-in Prius not sold in Australia.

"We are changing the way the Toyota business operates in NZ," says TNZ chief executive Alistair Davis. "We're moving to a transparent, consistent approach.

"This could be one of the biggest changes in distributor auto retailing in this country - maybe in the world. It's certainly the most significant by a market leader, rather than a new entrant or a minor player.

"It's one of the most integrated, in doing a lot of stuff all at once."

The TDP pricing strategy doesn't apply to vehicles purchased by fleets, which enjoy a national fleet discount that undercuts the discounted retail price.

Toyota in New Zealand is no longer referring to its retail outlets as 'dealers'. They're now 'stores', and the sales staff are now 'vehicle consultants', 'product experts' and 'store concierges'. It's the way of the future and some brands in Australia are already moving away from the traditional hard-sell methods, but the nearest exemplar for the Toyota NZ paradigm is Saturn, the now-defunct GM brand in the US. That GM subsidiary began life with a no-haggling consumer relationship model, but eventually turned away from the concept.

"The hard-sell is caused by two things," says Davis. "First, the dealership has a stock of cars they want to get rid of. Second, the salesperson needs to sell a car to pay their mortgage."

With Drive Happy, Toyota NZ will hold all the dealer stock in three metropolitan hubs: Auckland and Wellington in the North Island and Christchurch in the South Island. Dealers – sorry – stores will no longer have to hold stock and run it out aggressively. Vehicles will remain at the respective hub until it's sold through the store and ordered online.

"Dealers have an average of 50 cars in stock," says Davis. "With the vehicles in a pool, a customer [at any store] will have the choice of a thousand."

Retail staff will receive a bonus based on satisfied consumers surveyed after the sale. All the stores are businesses independent of Toyota, so some staff will continue to be paid by commission, but the Davis believes that will change.

"We reward our dealers [stores] for satisfied customers now, so there's a flow-down effect."

With lower stock levels at the retail outlets, there'll be more demonstrators on site for prospective buyers to test. Toyota is bumping up the number of demonstrators available to 750 vehicles around the country – that's double the number and as many as 15 vehicles for each store. Store management can decide to allow a buyer up to 24 hours to test a vehicle, and a 'buyer's remorse' clause in the sales contract provides the means for the buyer to return the vehicle within seven days for a full refund – as long as the vehicle has travelled less than 500km.

Toyota Australia was contacted by motoring.com.au for this story, but is yet to reveal whether the concept is under consideration here.