Toyota targets dealer mark-ups

Toyota Australia says it is cracking down on price gouging by its dealers and making a further attempt at shortening multi-year waiting lists for some models.

Customer delivery wait times as long as three years for popular models like the Toyota RAV4 Hybrid have prompted dealers to offer low-kilometre demonstrators at inflated prices to customers prepared to pay extra to jump the queue.

Declaring a brand-new car a ‘demo’ means the requirement to charge no more than the stipulated national drive-away price is removed.

But Toyota says it has revised its demonstrator rules for dealers so brand-new cars cannot be reclassified as demos and sold at inflated prices so easily.

It has also accelerated a previous agreement with its National Dealer Council to increase allocations of vehicles for buyers who have been in the line the longest.

Speaking at this week’s product showcase in Melbourne, where a number of forthcoming models including the new Prado, four-cylinder LandCruiser 70 Series and next-gen C-HR were displayed, Toyota Australia sales, marketing and franchise operations boss Sean Hanley said the company was doing everything possible to prevent price mark-ups and reduce wait times.

“In actual fact we are somewhat restricted on what we can do under the competitive laws of this country,” Hanley admitted, specifically addressing mark-ups.

“Having said that, we have very, very strict standards for our dealer network.

“We are redefining the rules around the kilometres on a demonstrator to be advertised as a used vehicle,” he explained.

“I won’t go into specifics other than to say that’s how we are trying to deal with it.”

Hanley also said Toyota was trying to convince its dealers not to mark-up prices.

“What we are trying to do with our dealers is encourage them to understand that our brand is built around trust, our brand strength is the reason we are doing so very well in the market right now.

“So we appeal to our dealers and it’s not all of them that are doing it.”

The issue of dealer mark-ups has been around for several years and a carsales survey suggests it is widespread. On August 31, there were 1240 used 2023-model Toyotas advertised with less than 500km on the odometer. Of those, 996 were being offered by dealers.

Hanley also urged customers not to pay inflated prices.

“We say to our customers simply there is no reason for you to pay over the odds for any Toyota – you are better off waiting.”

“Our brand is healthy and the reason it is healthy is because people trust us and we don’t want to breach that trust. And when we find that this is going on we take corrective action as best we can within the laws of this country.”

The root cause of the mark-ups that have caused so much angst is the production shortages on certain models that developed during COVID, which are only gradually being overcome.

The RAV4 Hybrid is the poster child for this issue and Hanley confirmed average waiting times were still around 18 months.

A scheme to allocate more vehicles further down the waiting queues for customers who have resisted buying at a marked-up price has been in place for some time.

Hanley revealed the Toyota National Dealer Council had recently signed off on an increased allocation to those buyers.

“We are working hard with our dealers now where we are prioritising those old orders,” he said. “The dealer council just agreed to up that percentage considerably so we can tackle more of those older cars.”

Hanley confirmed supply was increasing from Toyota factories and he predicted the remainder of the year and beyond would see big sales numbers posted.

“They [increased supply] are coming, and I can tell you over the next six, 12 to 18 months they are definitely coming,” he said.

While it still dominates the market, Toyota sales are down more than 20 per cent this year, to 111,426 units as of July, accounting for a market share of 16.4 per cent. But Hanley expressed confidence the brand’s traditional annual 20 per cent share and 200,000 sales figures would still be achieved in 2023 on the back of the increased supply.

But Hanley, who is essentially Toyota Australia’s number one salesman with an ability to spin most situations positively, conceded the brand had not done a good enough job of communicating wait times to thousands of customers.

“We’ve got massive demand and globally Toyota has massive demand,” Hanley said. “We have some shipping and logistics issues that have hit us, some quarantine issues that have hit us and we are not unique in this experience.

“These are all variables that impact our ability to tell a customer ‘your car is here’.

“We are in a high-demand phase of Toyota, which is a good position to be in. But it brings challenges and we know we have got to get better at it and we are learning and we are getting better at it every day.”

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