TOYOTA INTERVIEW: Going its own way
19 April 2011
Toyota's share of the fleet market fell significantly in 2010, but UK boss Jon Williams explained to Paul Barker that business cars are still vital to the company's UK operation
In terms of pure figures, 2010 wasn't a good year for Toyota in the corporate marketplace.
In an overall fleet market that was 10.4% up, Toyota's end-of-year figure was 4.1% down, and that's in addition to a miserable start to the year where the brand was involved in one of the biggest recall stories ever to hit the motor industry.
But despite the Japanese company slipping a couple of places down the fleet sales league table to 10th, managing director Jon Williams still views the sector as a key element of its business.
"Fleet is a very important part of our thinking, but we have to look at model life cycles and the type of fleet business we want to do - we're not a brand that will compete in the most-expensive segments," says Williams, pointing to the competitive and lower-margin daily rental, bodyshop and courtesy car markets.
"We're very focused on whole-life cost. Residual value is very important to us - we have to be aware of the size of the Toyota and Lexus network in a remarketing capacity."
Williams says the company is focused on the 'pure' fleet user-chooser and contract hire and leasing segments. "It's not a registration exercise - we want to find end users that want to drive Toyota and Lexus vehicles," he says. "We are very focused on fleet. We have a good business centre network, and we'll try to build on this more as opportunities emerge going forward."
Williams says the brand has a number of strong models with "natural demand" in the business sector, naming the petrol-electric Prius and Auris HSD hybrid models, as well as the Hilux pick-up and new Lexus CT200h.
Toyota is also working to increase the service received by existing business customers. "We have a good breadth and offering to fleet customers and a very good network focused on customer satisfaction," says Williams. "We're trying to work with the network in terms of servicing, fixed price and maintenance."
The company has maintenance packages in place but, Williams feels that it's something the firm needs to do more of, branding a continued improvement of the company's SMR proposition as "absolutely essential". He also pointed out that the SMR proposition is a key advantage for hybrid vehicles, as there is less brake wear with the regenerative braking system, as well as it being a beltless powertrain, which also cuts maintenance costs. "Most customers come in thinking it will cost more to maintain a hybrid so we need to communicate this to the end customer."
Extended warranties are also being more targeted at business car customers, although not for the extended timeframe but because fleets can sometimes see the benefit in having the car covered up to 100,000 miles rather than the standard 60,000. And from the service perspective, Williams says Toyota has invested in the past four years in same-day delivery on parts order before midday, to help keep cars off the road for the minimum amount of time.
"We're taking a long-term view, and are not going to do a short-term registration exercise - hitting targets, beating other manufacturers for one year; that's not what we're about," Williams states. "We're trying to lay longer-term foundations and we look at it from a volume perspective rather than a position in a table.
"There will be opportunities, and as we bring in new models with new hybrid powertrains we are planning to grow our volume over time. I'm not hung up on position and whether it makes us number 12 or number eight - that's a consequences of the business we are doing - but we have a quite robust plan in terms of volume, and as we launch incremental models and replace existing models we see opportunities."
Those new and incremental models include some quite significant business car launches.
The new Yaris supermini comes later this year, with 2012 bringing the rechargeable electric Plug-in Prius, the seven-Seat Prius+, a hybrid version of the new Yaris and a new sports coupe based on the FT-86 concept car.
Baby Lexus entices Toyota drivers
The new Lexus CT200h should appeal strongly to Toyota customers looking to move up to a premium model, according to Belinda Poole, speaking in her last assignment as Lexus UK director before she recently moved to her new role in Toyota Europe (see 'Management changes' right').
At the moment 10% of Toyota owners leave the brand every year to upgrade to the premium market and 32% of those stay in the lower medium segment, according to Poole, migrating to the likes of the Audi A3 or BMW 1-series.
"Until now Lexus has not had a product to offer these customers so they had no choice but to start their premium journey with another brand," said Poole.
"Now with the CT200h we have a product to retain a greater number of customers within the group and attract new younger customers."