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Toyota plans realistically for a 'flat' car sales year

Toyota GB has drawn its wagons into a circle for 2011.

Its new car sales are expected to be flat and its focus is on maintaining its share of the market and keeping its dealers profitable.

That comes after a challenging 2010.

The brand and its dealers had to manage the negative publicity of global car recalls which threatened to undermine Toyota’s long-standing reputation for quality engineering.

It was also a year when its slice of the UK new car market shrank to 4.3% from the 5% share it had held for the past five years.

Its registrations fell by almost 15% while the total market grew by 1.8%.

Toyota GB managing director Jon Williams expects Toyota’s new car sales to be flat in 2011, and his aim is to maintain market share.

“We’re trying to plan realistically, to set targets that are achievable and ensure the cost base of the network is in line with making money at that level – and then beat it,” he said.

Average return on sales for the network is 1.8%. That’s slightly behind Volkswagen, but ahead of other franchises such as Nissan and Ford.

“We’re very focused now on profitability,” said Williams.

“It’s a very important metric that we have a profitable network because our whole programme about the customer experience is reliant on a network able to invest in it.”

It’s a vital point. Now the brand must hold on to the customers it already has. New Toyotas now have a five-year warranty as standard, which Williams describes as “a real opportunity to breakthrough in customer retention”.

It is a signal to existing customers in the change cycle that Toyota will continue to serve them well.

The carmaker also must rebuild non-customers’ confidence in Toyota. Investment is being made into communicating its strengths, such as the warranty, its advances in hybrid technology and its UK manufacturing.

“We have to convince those consumers to put us back on their shopping list going forward,” said Williams.

The dealer network also proved its mettle in supporting with customers during the recalls. It engaged well with customers, some of whom had not been in a Toyota dealership for a long while.

Toyota GB’s management views the retail partners as a real asset.

Williams said: “From our point of view, a dealer network offering a great level of service that encourages our customers to stay within the franchised network is a key opportunity. We want the first, second and third owner to use us for servicing.

"We have to drive relevant service offerings, fixed price offers and service plans that make the customer want to stay with us.”

Retention of the 0-8 year Toyota parc is around 34% and “not good enough”, said Williams. With Lexus it is about 60%.

The carmaker has run a series of workshops with dealers to focus on customer retention and to help them look at the value chain created when selling a car. The objective is to consider what it means to a customer to stay within the brand.

It has been studying what customers want through focus groups. The answers were convenience, transparency, a good experience and up-front pricing.

“We’ve got to earn this business, we’ve got to earn the right to increase our customer retention.”Williams said Toyota was helping the network by having a transparent pricing policy. It is developing a programme of fixed priced servicing and common repairs and will begin a pilot pro-gramme with selected dealers towards the end of this year.

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