Toyota says it can’t stop scalpers

Toyota Australia says it can’t stop buyers profiting from selling a brand-new, in-demand vehicle shortly after purchase – but it is working to overhaul its dealer allocation system in order to prioritise genuine customers over short-term investors.

Despite promising to stamp out the practice of scalping, flipping or, as Toyota calls it, short-cycling new vehicles – whereby some owners sell their new car for a profit soon after buying it or even before delivery – Toyota admits local laws prohibit hard action against dealers.

“The laws of this country don’t allow us to stop reselling,” says Sean Hanley, Toyota Australia vice-president of sales, marketing and franchise operations.

“However, I just appeal to any customer – don’t pay above retail for a new car.”

While not as accepting as the recent Ford admission that it wasn’t concerned about buyers profiteering from new cars, Hanley’s admission appears to have taken a step back from his previous promises to tackle short-term flipping.

Scalping is now widespread across the industry as demand exceeds supply for many popular models, making many buyers willing to pay well above retail to skip long waitlists.

Among those models are several Toyotas including the LandCruiser 70 Series workhorse, which remains unavailable to order with a waitlist stretching out to 2024, the GR Yaris hot hatch, orders for which will reopen in November, the new GR 86 coupe, just 1100 of which will arrive here in the first year, and the new GR Corolla, just 500 of which will come Down Under initially.

Hanley says there have been numerous discussions with the 280-strong Toyota dealer network to reduce mark-ups and excessive dealer delivery fees for new cars.

However, he says used cars are a different story and that the market ultimately determines prices of those. The problem is it’s often a grey area between what is a used car and what is new; you don’t have to look far to find dealers offering low-kilometre “demonstrators” for thousands above the new-car price.

Blame it on Australian Consumer Law, which is overseen by the Australian Competition and Consumer Commission.

ACL is designed to allow market forces to determine pricing. As the ACCC explains, “prices are impacted by supply and demand issues”.

For decades, supply has almost always topped demand, meaning in the new-car market buyers have regularly been able to wrangle discounts because there have almost always been more cars (excess supply) than buyers (demand).

But the COVID 19-related boom in demand and crunching of supply has flipped the status quo on its head. With some popular models – many off-roaders and some hybrids and EVs – people have been able to sell a new car for more than they paid for it.

In some cases savvy buyers can pocket tens of thousands of dollars, all of which is tax free (the government doesn’t tax profits on vehicles for private buyers).

And none of it is illegal. On the ACCC website it states that “businesses are generally able to set their own prices” and that ‘price gouging’ – or sudden increases in price – are not illegal.

The theory is that a seller will get what a buyer is willing to pay, and if there’s enough competition in the market there should be ample alternatives for consumers to shop around.

Except for the past 18-odd months that hasn’t always been the case, especially with in-demand models. So, what’s the answer?

Toyota’s sales chief is calling for common sense and a long-term view, something arguably more important given the expectation is that the new-vehicle market will return to some sort of normality in the next couple of years.

“We certainly appeal to our dealers to do the right thing and in the whole they’re responsible and they do do the right thing,” said Hanley.

But he says the company is looking to change the way it allocates vehicles within its dealer network, with the focus on shortening wait times and getting cars into the hands of genuine customers rather than those looking to make a quick buck.

“We’re looking at different ways to ensure that our cars get into the hands of people who most want them,” said Hanley.

He says the learnings of the last couple of years give the company a chance to “reset” some of its systems, with the allocation of cars high on that list.

“You’ve got to be able to tell customers when they’re going to get a car. Somehow, we’ve got to get to a better position where we can tell them fairly closely…”

Exactly what Toyota’s new dealer allocation system will look like is yet to be announced, but it appears there are changes coming to the way Australia’s top-selling auto brand sells its vehicles.

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