The Road Ahead

Toyota and dealers celebrate their success while laying the foundation for continued growth well into the future
by Dan Miller
Sept/Oct 2016
The Road Ahead
Core Strength
By building up R&D, Toyota will remain a pioneer in the development of new automotive technologies. “Anticipating and planning for the future, being ahead of the curve, is one of Toyota’s core strengths", said Jim Lentz, Toyota Motor North America CEO.
Photos by Brian Payne
Toyota dealers gathered in Las Vegas in September for their annual meeting with Toyota Motor North America’s executives. And while they talked at length about what will be different—from breakthrough technologies to innovative products to creative marketing strategies—it was important to acknowledge what seems to remain the same.

 

Prime Time
Bill Fay, group vice president and general manager of the Toyota Division, highlighted the many positive media reviews of the newly launched Prius Prime. Toyota’s objective with the all-new vehicle: “to lead the way with plug-in hybrids,” said Fay.

“Let me be the first to congratulate you for all that you’ve done to keep Toyota the No. 1 retail brand in America,” said Bill Fay, group vice president and general manager of the Toyota Division.
 
Bob Carter, senior vice president of Automotive Operations, echoed that sentiment.
 
“Why am I smiling? Because you’re still the No. 1 retail franchise in the industry,” said Carter.
 
It’s an accomplishment that bears repeating. No matter what the market holds in store, Toyota will continue to succeed—thanks to its strong partnership with its dealers and its steadfast commitment to the core principle of continuous improvement.
 
Keep on Trucking
So, for example, Carter noted that while sales are in step with 2015, Toyota and its dealers will achieve a strong 2.1-million-unit total this year in a fundamentally different way. Fueled in part by stable oil prices, sales of trucks, SUVs and crossovers are approaching 60 percent of Toyota’s total vehicle mix—unprecedented in the brand’s history. The RAV4 is leading the way, with sales expected to grow to 350,000 units or 14 percent more than the year before. But Highlander, 4Runner, Land Cruiser and Tacoma are also very hot commodities. To keep this surge going, Carter told dealers that Toyota has taken steps to boost light truck production in the year ahead.
 

Making a Difference
Kaz Ohara, president and chief executive officer of Toyota Motor Sales, thanked the dealers for their generosity. Last year, through the Dealer Match program, Toyota and its retail partners combined to donate nearly $9 million to charitable causes on the local level.

 
Though passenger car sales across the industry have slowed, Camry remains the top-selling car in the United States and Corolla follows closely behind at No. 3. And the all-new Prius Prime, which recently began to arrive in showrooms, has been garnering rave reviews. Should market forces change, Toyota will be well positioned to capitalize.
 
In the meantime, Toyota will continue to press its advantage on multiple product fronts. For example, when it comes to safety, Carter announced that Toyota Safety Sense—a trio of driver-assist technologies designed to help protect drivers and passengers from harm—will become standard equipment on 19 Toyota models by the end of 2017.
 
Going for the Gold
To get the word out about Toyota and its products, including several future models unveiled for dealers’ eyes only, Group Vice President of Marketing Jack Hollis said the company will double down on its strategy to advertise heavily on sports- and music-related platforms.
 

Powerful Placement
Jack Hollis, group vice president of Marketing, said music will remain a core component of Toyota’s advertising strategy. In the coming television season, that will include sponsorship of “The Voice,” the hugely popular singing competition on NBC.


In that first category there’s none bigger than the Olympics. Toyota will become an official sponsor of the Games in January, ramping up its tie-ins in anticipation of the 2020 Summer Olympics in Tokyo. Its “Stand Together” ads and #LetsJoinHands social media campaign during the recently held Games in Rio gave the company a running start.
 
“Our Olympics sponsorship is one we intend to take full advantage of,” said Hollis. “In fact, Toyota won a little gold ourselves in Brazil when one of our spots won first place in USA Today’s Olympics ad meter.”
 
Other sports activations will include FIFA soccer, NASCAR and the NFL, highlighted by a continuing sponsorship of Sunday Night Football—the nation’s highest-rated television show.
 
A sampling of music-related venues includes the Lollapalooza music festival, Billboard Latin Music Awards, VH1 Hip Hop Awards and MTV Movie Awards. Hollis, though, had one more big announcement to make on this front: Toyota will be the sponsor of “The Voice,” a hugely popular music competition series, in the coming TV season.
 
“It’s kind of the mother lode in terms of audience interaction and reach with a large social media following that we can leverage,” said Hollis. “What’s also great is that beyond running 30-second spots, we can creatively and organically incorporate our brand and products into the show both on air and online.”
 
A Seamless Experience
Compelling products and creative marketing should generate a lot of traffic to Toyota dealerships and, increasingly, their websites. To take full advantage of that flow, Fay updated dealers on the development of Toyota Express Purchase (TXP), a comprehensive initiative to give customers a seamless experience from their online interactions with the brand all the way through the vehicle purchase, delivery and ownership phases at the dealerships.
 

Digital Demo
Fonda Trice, general sales manager at Toyota of Union City (Ga.), gets a demo on some of Toyota’s new technologies from Toyota Motor Sales’ Josh Pinheiro.



A year ago, Toyota collaborated with a group of trailblazer dealers to begin to clarify what this new process would look and feel like. Now, dealers in Cincinnati and Minneapolis—whom Toyota refers to as “First Movers”—are poised to begin putting these new technologies to the test. Potentially, customers will be able to carry out virtually all of the purchase transaction online, such as searching their dealership’s inventory for a specific vehicle, getting an appraisal of their trade-in, applying for credit and estimating monthly payments.
 

Giving Back
John Craig—secretary, treasurer and parts manager at Craig Toyota in Madison, Wis.—adds his endorsement to Toyota’s community connections wall. The display cast the spotlight on the dealers that advanced to the finals of the “Best in Town” award, which this year focused on philanthropic outreach that went above and beyond.



“This technology will not just streamline the process but will support and enhance the trusted relationship you build with your guests,” said Fay. “It will succeed, in large part, because it will be co-created with you. We will work closely with the ‘First Movers’ to make it real.”
 
Similar efforts are also underway in service and parts. In fact, some dealers have already begun to implement Toyota Service Technologies.
 
“Our goal is to get owners back into your stores for all of their vehicle needs,” said Fay. “We know that satisfied service customers are twice as likely to repurchase another Toyota.”
 
Toyota Motor North America CEO Jim Lentz, said changing demographics are helping to drive this retail transformation. Baby Boomers, who tend to prefer a traditional sales approach, remain the core of Toyota’s customer base. But to continue to thrive, the brand must strive to appeal to Millennials. And, the next wave—Generation Z (people born after 1995)—isn’t too far behind.
 
“Gen Z is shaping up to be a lot like the Baby Boomers in terms of their interest in cars,” said Lentz. “Some 95 percent of them want to own a car by the time they turn 19. But they’re a lot like the Millennials when it comes to the purchase process.”
 
Creating Our Future
Looking even farther down the road, Toyota shared tangible evidence of how it plans to remain a pioneer in the development of new automotive technologies. For instance, the company will invest more than $1 billion over the next five years to fund the Toyota Research Institute, a research and development enterprise designed to bridge the gap between fundamental research and product development. Carter said that’s on par with the “commitment the company made to develop the first Prius.”

 

A Glimpse of the Future
Mike Smith, owner of Bob Smith Toyota in La Crescenta, Calif., dons virtual reality goggles to experience one facet of Toyota’s far-reaching R&D capabilities. Dealers learned that the company is boosting its global investment in the long-term future of mobility, founding the Toyota Research Institute and launching the Toyota Connected startup firm just in the past year.



Also new is Toyota Connected, a startup firm that will focus on significantly expanding the company’s capabilities in the fields of data management and data services development.
 
“These are new investments,” said Lentz. “We are not diverting funds from other R&D efforts. Anticipating and planning for the future, being ahead of the curve, is one of Toyota’s core strengths. As (Toyota Motor Corporation President) Akio (Toyoda) likes to remind us, ‘The best way to predict your future is to create it.’”
 
Closer to home, Lentz updated dealers on progress toward the creation of One Toyota. He said construction of TMNA’s new headquarters campus in Plano, Texas, is ahead of schedule. Team members will begin moving in next spring and all should be in place by next fall. He said a higher-than-expected percentage of team members and top leadership will make the transition.

“We might pick up a bit of a Texas accent and we might start pressing our jeans,” joked Lentz. “But otherwise it’s all the same. Because our relationship with you is our most valuable asset. And this will never change. We are your partners for life.”

 

Wired World
Dealers interact with displays that introduce various components of Toyota Service Technologies, a new initiative that aims to give customers a seamless experience on the service drive.

 
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