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Old 16 Nov 2012, 06:58 (Ref:3166962)   #16
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Originally Posted by GTRMagic View Post
Just wait til Toyota brings its new finance model into the retail market

There is a strategy apparently to mimic the US concept of a fully maintained operating lease, charging a set price per month, and all you have to do is keep the mileage within agreed numbers (reflected in the price), the car serviced at genuine Toyota dealers, and put fuel in it, and there should be no other costs

Supposedly this is scheduled for a 2013 Q1 launch

It should be an absolute gamechanger in the industry!

Imagine driving a brand new Corolla for say $400 a month.. No more to pay. Then get a new one for the same money in 3 years time..
Oh you guys don't have that?

We've had that for over 20 years.

Usually there is several thousand $ up front for various fees they hit you up for when you sign. As an example:

http://www.toyotafinancial.com/consu...ilsPage_unsctf

Leases usually sucker in "payment buyers" or business owners or those that like new cars and like to trade in all the time. They are not always financially advantageous.
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Old 16 Nov 2012, 08:03 (Ref:3166972)   #17
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Sorry, can't agree - those types of finances packages have been around literally for decades from the luxury brands plus have also been available from finance companies for quite some years.

Could be new to Toyota or for that matter to a volume manufacturer finance arm but game changer? Not even close.
I think you might be surprised.. the likes of Lexus, Mercedes Benz and BMW have been playing the guaranteed buyback game for a number of years...

... but the likes of Toyota with mainstream cars.. it will be something new..

A couple of importers have offered near-zero interest rates through their dealer networks, and enjoyed a significant volume upswing in models that previously couldnt been brought to life with any other means...

Metal is moving... and the finance solution is one of the reasons for the activity..

Whether this pulls forward demand, or adds to the overall aggregate is a numbers game that nobody seems to understand just yet.. but the accretive activities in the servicing and parts divisions from the increase in the carpark is something that will pay back the dealer for the next 5 years.

In the Toyota example, they are said to also be decentralising some of their fleet activities, allowing local dealers the ability to sell/deliver/administer fleet sales activities in their PMA.

Someone is thinking outside the box... and with borrowings in Japan possible at less than 1% p.a. coupon rate, and an economy locally that is supposedly the best thing since sliced bread... lets see what the world delivers us
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Old 16 Nov 2012, 08:40 (Ref:3166986)   #18
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How does this affect the dealerships, besides an obvious increase in stock flow?

Will it affect the profit margins on the cars themselves?
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Old 16 Nov 2012, 08:49 (Ref:3166989)   #19
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Originally Posted by Umai Naa View Post
How does this affect the dealerships, besides an obvious increase in stock flow?

Will it affect the profit margins on the cars themselves?
The basis of the finance opportunity swings around the $ per week/month for the consumer.

Presumably at that point, there will be a 'points based' pricing matrix, working on the cost of the base car, and the variant options... with a suggested retail margin. Like what happens now. What might be interesting to understand is if the retail margin actually increases for the dealer in this scenario.. or if it is fixed via recommended guidelines for pricing... all ACCC compliant of course

What has happened in other brands is that a factory-approved financing deal such as this style, sees a commission go to the dealership for initiating the deal, which is some form of compensation for the dealership losing the capacity to sell finance, insurance, warranty & aftermarket products to that customer.

Conceptually there if there will be more cars sold.. there will be an increase in the requirement for finance and insurance sales people, an increase in the number of cars that within the first year of ownership require servicing...

Or not... depends if they have their sums right..

What is also an unknown is what the competitor response might look like. The likes of Toyota Financial Services has the backing of the manufacturer.. as does Nissan's Nissan Motor Finance...

... but what of Holden or Ford or Mazda, who dont have their own local finance houses available to help weave such magic...
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Old 16 Nov 2012, 09:31 (Ref:3167004)   #20
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Food for thought.

Since you mentioned service, which is where I belong, I wonder what the inner workings are in the capped-price deals. Surely some dealerships are hurting if they're not being reimbursed the difference?
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Old 16 Nov 2012, 10:15 (Ref:3167021)   #21
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Food for thought.

Since you mentioned service, which is where I belong, I wonder what the inner workings are in the capped-price deals. Surely some dealerships are hurting if they're not being reimbursed the difference?
Capped price service deals do one of two things, it arguably feeds a dealer with new customers wanting 'factory' servicing who may have previously used their own mechanic/Ultra Tune/Midas/self... and allows the service centre to offer opportunities to repair other parts of their car... by way of upselling of items outside the 'capped price' option

Capped price servicing doesnt seem to get a lot of direct manufacturer financial support at the minute. It doesnt always seem to be a manufacturer-induced thing, although it is said that Hyundai is likely to bring in a variation of this sooner rather than later, which may in fact convert to free 'standard' servicing for the warranty period of the car.

Indeed there is a multi site Ford/Mitsubishi/Toyota dealership group here in Sydney that has been doing this for some years.. and they are notorious for spruiking injector cleans, air pollen filter replacements, windscreen wiper blade replacements, power steering fluid changes, wheel balancing & alignments etc etc... I reckon they are Wynns #1 customer for injector cleaning products!

There are some upsell maximisation technologies now like EVHC software, where the service advisor takes an iPod/iPad with him/her to review the car upon delivery from the customer, with a 50 point checklist on various consumable parts of the car, their condition, and likely future life.

The customer is informed of the condition report, of any work required that might be immediately apparent. The customer can say yay or nay.

This is then denoted on the service invoice to the customer, into the service record of the car inside the dealership Reynolds system, in their CRM system to use as an introduction to potential future work from the customer and approximate timings for when these parts might need replacement and provide a source of potential ongoing work.

Investment in such technology has come about to some extent by the need to crank up margins when they are squeezed by fixed price, fixed time service.

There is only so much that a service team can do to use lower cost apprentices to do the more basic of service work, or where a technician specifically skilled can do a job that is recorded in the service manual as requiring an hour in say 45 minutes... the efficiency & productivity of the team will only get you so far.. as the underlying assumption is that the service hours available each day are pretty much fully sold..
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Old 16 Nov 2012, 12:15 (Ref:3167052)   #22
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Originally Posted by GTRMagic View Post
Just wait til Toyota brings its new finance model into the retail market

There is a strategy apparently to mimic the US concept of a fully maintained operating lease, charging a set price per month, and all you have to do is keep the mileage within agreed numbers (reflected in the price), the car serviced at genuine Toyota dealers, and put fuel in it, and there should be no other costs

Supposedly this is scheduled for a 2013 Q1 launch

It should be an absolute gamechanger in the industry!

Imagine driving a brand new Corolla for say $400 a month.. No more to pay. Then get a new one for the same money in 3 years time..
Please, please, don't wish that upon me. I can't concieve of anything worse than being stuck with whitegoods trying to pass its self off as a car. Well I can, but that involves hair removal with paint stripper.

Back on topic. As long time Holden/GM owner, fan, mechanic, I'm always pleased to see henry getting screwed.

BUT I am concerned with the loss of jobs & capability in this country.
We used to make so, so much in Australia. Now we're a nation of raw materials exporters. And that saddens me.
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Old 16 Nov 2012, 12:21 (Ref:3167058)   #23
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Ford marketing is just hopeless….the Ford Ecoboost is a decent car but there has hardly been any marketing of the car. Also might help if they brought out a diesel for the Falcon and a few other models to boot. You would be bonkers to purchase a Falcon now if you were a private buyer (let alone fleet), Mondeo makes more sense
Agreed. frod marketing seems more focused ( no pun) on 'conectivity' so one can plug in ya MP3/smartphone/ whatever gadget is flavour of the month).

WTF happened to extolling the things that actually matter in a car?
You know. Minor stuff like performance, safety, enconomy, looks, price etc.
frod are just xxxxing on their heritage. Such as it was
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Old 16 Nov 2012, 12:49 (Ref:3167072)   #24
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Originally Posted by GTRMagic View Post
Capped price service deals do one of two things, it arguably feeds a dealer with new customers wanting 'factory' servicing who may have previously used their own mechanic/Ultra Tune/Midas/self... and allows the service centre to offer opportunities to repair other parts of their car... by way of upselling of items outside the 'capped price' option

Capped price servicing doesnt seem to get a lot of direct manufacturer financial support at the minute. It doesnt always seem to be a manufacturer-induced thing, although it is said that Hyundai is likely to bring in a variation of this sooner rather than later, which may in fact convert to free 'standard' servicing for the warranty period of the car.

Indeed there is a multi site Ford/Mitsubishi/Toyota dealership group here in Sydney that has been doing this for some years.. and they are notorious for spruiking injector cleans, air pollen filter replacements, windscreen wiper blade replacements, power steering fluid changes, wheel balancing & alignments etc etc... I reckon they are Wynns #1 customer for injector cleaning products!

There are some upsell maximisation technologies now like EVHC software, where the service advisor takes an iPod/iPad with him/her to review the car upon delivery from the customer, with a 50 point checklist on various consumable parts of the car, their condition, and likely future life.

The customer is informed of the condition report, of any work required that might be immediately apparent. The customer can say yay or nay.

This is then denoted on the service invoice to the customer, into the service record of the car inside the dealership Reynolds system, in their CRM system to use as an introduction to potential future work from the customer and approximate timings for when these parts might need replacement and provide a source of potential ongoing work.

Investment in such technology has come about to some extent by the need to crank up margins when they are squeezed by fixed price, fixed time service.

There is only so much that a service team can do to use lower cost apprentices to do the more basic of service work, or where a technician specifically skilled can do a job that is recorded in the service manual as requiring an hour in say 45 minutes... the efficiency & productivity of the team will only get you so far.. as the underlying assumption is that the service hours available each day are pretty much fully sold..
Honestly, I had a fairly good understanding of how it all worked, but trying to coerce a employer (at the time) to provide clear-cut information on it was difficult. There also seemed to be no defined strategy in place that would ensure maximum benefit to the dealership. In its execution, or lack thereof, it appeared to be nothing more than a foot-shooting exercise, that saw plummeting customer satisfaction, and surveys that were probably spat on.

However, there were representitives of the franchises involved, claiming that these particular concepts were very successful, providing the playbook was adhered to absolutely.
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Old 16 Nov 2012, 20:42 (Ref:3167222)   #25
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Originally Posted by GTRMagic View Post
I think you might be surprised.. the likes of Lexus, Mercedes Benz and BMW have been playing the guaranteed buyback game for a number of years...

... but the likes of Toyota with mainstream cars.. it will be something new..

A couple of importers have offered near-zero interest rates through their dealer networks, and enjoyed a significant volume upswing in models that previously couldnt been brought to life with any other means...

Metal is moving... and the finance solution is one of the reasons for the activity..

Whether this pulls forward demand, or adds to the overall aggregate is a numbers game that nobody seems to understand just yet.. but the accretive activities in the servicing and parts divisions from the increase in the carpark is something that will pay back the dealer for the next 5 years.

In the Toyota example, they are said to also be decentralising some of their fleet activities, allowing local dealers the ability to sell/deliver/administer fleet sales activities in their PMA.

Someone is thinking outside the box... and with borrowings in Japan possible at less than 1% p.a. coupon rate, and an economy locally that is supposedly the best thing since sliced bread... lets see what the world delivers us
Yep, let's see but fully maintained finance packages (which are what you referred to in your initial post) have been around for years from the prestige finance arms - also at volume dealers although offered through the finance companies rather than manufacturer finance arms. Mountainstar is right, not just for the USA - this type of finance has been around a long time.

Strange that Toyota are only decentralising fleet activity now - others have again been doing it for a very long time.
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Old 16 Nov 2012, 21:21 (Ref:3167238)   #26
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Yep, let's see but fully maintained finance packages (which are what you referred to in your initial post) have been around for years from the prestige finance arms - also at volume dealers although offered through the finance companies rather than manufacturer finance arms. Mountainstar is right, not just for the USA - this type of finance has been around a long time.

Strange that Toyota are only decentralising fleet activity now - others have again been doing it for a very long time.
Toyota makes shedloads from their fleet deals.. some of the most successful ones, and where the buyback/fixed cost per month deals works is with Coca Cola, supplying a variety of different models for their demonstration, corporate & executive fleets... decentralising this may change the go to market model a fair bit...
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Old 16 Nov 2012, 21:26 (Ref:3167239)   #27
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Originally Posted by Umai Naa View Post
Honestly, I had a fairly good understanding of how it all worked, but trying to coerce a employer (at the time) to provide clear-cut information on it was difficult. There also seemed to be no defined strategy in place that would ensure maximum benefit to the dealership. In its execution, or lack thereof, it appeared to be nothing more than a foot-shooting exercise, that saw plummeting customer satisfaction, and surveys that were probably spat on.

However, there were representitives of the franchises involved, claiming that these particular concepts were very successful, providing the playbook was adhered to absolutely.
I am not sure many dealers have a longer term strategy here... the simple solution to everything is to put the price up.. impossible if you are in a fixed price servicing scenario... so you have to find ways to eke more from the customer.

The good ones make the customer feel like they needed to do the work, the poor ones makes the customer annoyed, and even more disenfranchised with motor dealers & mechanics...

All reflected in the net promoter scores from customer surveys...

I have seen some work around increasing things like environmental levies for waste disposal, oils or tyres or other things... plus charging more and more for service loan cars..

I dont see how any of these things actually enhance the customer experience...
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Old 17 Nov 2012, 00:55 (Ref:3167307)   #28
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Some dealers don't get it. The last car I bought, discussed with salesperson a figure of $x per week. Chose a car to suit this. Then spoke to finance manager who after added extra undisclosed charges came up with a figure 50% per week higher.

Ended up getting same car from different dealer for $x-5 per week, all inclusive.
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Old 17 Nov 2012, 01:10 (Ref:3167309)   #29
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Yeah, the new car buying experience isn't what it could be.

My own mother had a situation where the salesman demanded to know how much she could afford a week on it, refusing to give her a bottom-line figure. When she complained to the dealer principal, his reposonse basically said that as long the guy is selling cars, his job is perfectly safe.

The same guy dragged my sister in off the forecourt, sat her down, and tried to get her to sign her name away to a holding fee of something like $500, which was apparently "standard procedure". Mind you, she hadn't even sat in the car she was hoping to buy, because he wanted to sell her something else. Thankfully, she told him to jam it, and went elsewhere.
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Old 17 Nov 2012, 01:50 (Ref:3167318)   #30
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It actually seems very hard to lose your gig as a car sales person.

Targets are relatively simple, you are required to sell a certain volume of vehicles, with a minimum gross margin..

For the most part, the dealership brings in the warm-ish leads for you, the internet channels driving foot traffic, making genuine appointments with sales staff, who are then charged with converting those leads into sales within particular margin parameters.

But thats not where the fun stops.

The reason some car salespeople indicate that car X is better than car Y is the volume of sales incentives on one compared to the other.

Most dealerships are focused heavily on their cashflows, on maintaining the minimum number of cars on their floorplan finance, and knowing that most financiers have a trigger point in age of cars where they have to be paid out.

So... for example, a brown Ford Falcon XR6 might have been on the books for 75 days, and the dealership is obligated to buy this car off the floorplan when it 90 days of age.

To make sure that doesnt happen, the dealership incentivises the sales staff, offering bonuses of $250, $500, $750 or more to clear this particular item of inventory...

Meantime, Fred Bloggs wants a white XR6. Goes to his local Ford dealer who has the brown XR6 in stock that is getting very ripe in age.

Sales person listens to the requirements.. Takes the prospective customer for a test drive... get them to feel the product, love the product... to create the emotional attachment with the car..

They discuss a deal.. the prospective buyer says he wants a white one.. sales person tells him the whites ones are scarce and it might take some time (weeks/months/never..) to source. Might even go away from the desk to appear to talk to someone in stock control out the back.

But there is this brown one over here. Same spec as the one you want. You can pick it up on Wednesday.

Plays to the emotional attachment to the car, how great it is to drive, how great it is to be seen in, pushes all the right buttons on the prospective customer such that the faster he/she/it gets into that car becomes the primary imperative

Sold.. one brown XR6... to a customer who didnt want that colour really... and the salesperson gets their sale, at a good margin, and with a nice aged stock kicker along for the ride.

And.. the dealership (and manufacturer) surveys the customer, who gives glowing feedback because the emotional attachment to the car has overridden the sensibilities of the deal.

Which the sales person also gets a bonus on...

Allegedly of course
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