Introducing No-Haggle Price

Toyota Canada Inc. is abandoning the no-haggle price strategy that was a key feature of
its Access Toyota sales system, a radical overhaul of the way the company sells vehicles
that is being closely watched by its rivals, but is also the subject of lawsuits in Quebec
and British Columbia.

The move to eliminate one-price selling for new cars, trucks, minivans and sport utility
vehicles comes about one month before Access Toyota is scheduled to be introduced in
Ontario. The country's biggest new vehicle market is scheduled to be the last region of
the country to adopt the program, which one industry source described as a
"revolutionary" change in the traditional method of buying a new vehicle.

In addition to one-price selling, the program involves training sales people to make
them more customer-friendly, changing the sales process to reduce the time spent in a
dealership and use of the Internet, to buy instead of entering an outlet. The program has
been in place since 2000, when it was started in Manitoba before a national rollout to
the company's 230 dealers.

"Obviously this is the end of the program as the pricing was the key segment," said one
dealer.

Dealers said they were notified of the change in a memorandum from Toyota Canada
president Kenji Tomikawa last Friday. Company officials would not talk about the
decision yesterday or reasons for the move.

"We don't have anything to discuss at this time," said spokesman David Stone.
Announcements to dealers are "privileged communications which we don't normally
talk about."

One dealer suggested that the Canadian sales arm of Toyota Motor Corp. was told to
change the program because dealers have become considerably less aggressive in the
market, and reduced advertising, for example. A Quebec lawsuit challenging the pricing
practices has not yet been certified as a class-action suit but is proceeding, said Daniel
Belleau, a Montreal lawyer who is handling the case. Court documents filed in the B.C.
lawsuit said dealers set prices unlawfully, refused to offer discounts from the Access
price and would not offer free options or extra features.

The allegations have not been proven in court and the suit has also not yet been certified
as a class-action, lawyer Leslie Mackoff said yesterday. Access Toyota was a key part of
the company's Vision 2010 program, a successful attempt to grab 10 per cent of the
Canadian market by 2000. Toyota Canada now has about 12 per cent of the Canadian
vehicle market.

But it was also controversial with the federal government. An investigation by the
Competition Bureau examined allegations that the monthly setting of prices by dealers
in a particular region amounted to price-fixing. As part of a settlement of that probe last
year, Toyota Canada agreed to make it clear to dealers and sales people that they could
sell vehicles for less than the Access Toyota price.

In addition, the auto maker agreed to donate $2.3-million to charities as part of the
settlement. The Access program involved more than just one-price selling, although one
dealer described that feature as the backbone of the program. The changes to the
traditional cat-and-mouse negotiations that many buyers despise included: guarantees
on interest rates for 30 days so customers purchasing near the end of one month were
still eligible for low-interest finance rates even if the programs had expired by the time
they picked up their vehicles;

Standard charges across the country for the predelivery inspection that dealers perform
before customers drive away; The move to end one-price selling is "a huge victory for the
consumer," said Paul Timoteo, president of CarCost Canada, a consumer advocacy firm
for car buyers that charges a fee for members and helps them get discounts on vehicles.

A CarCost comparison of prices in British Columbia and Ontario, done last month,
found transaction prices for Toyota vehicles were in some cases just a few dollars less
than the Manufacturers' Suggested Retail Price, compared with prices substantially
lower in Ontario. The biggest discount in British Columbia was on the 2004 Sequoia, an
SUV that carries an MSRP of $63,620. The Sequoia was fetching $63,171 at B.C. dealers,
while CarCost members could pay $57,881 in Ontario, a $5,290 difference.

In Manitoba, dealers were asking $63,234, according to the Access Toyota website. On
the 2005 compact Corolla sport model, CarCost members in Ontario could pay $18,528,
compared with the set price of $19,954 in British Columbia. The Automobile Protection
Association reached a similar conclusion by examining prices in Montreal, said George
Iny, president of that consumer group. Mr. Iny praised the other elements of the
program, such as increased training for sales people and full disclosure of all charges.

"Hopefully they'll be able to keep those," Mr. Iny said.

Dealers in regions where the program has been in place for some time disputed the
notion that consumers weren't getting a fair deal.

"The whole process is seamless and so much better for the consumer," said one.

A. Why TOYOTA avoid conventional selling process and launched TOYOTA Access
Program?

Ans: Purchasing a car in Australia is similar to most other countries – one can buy a new
car from a dealer or buy a used car from a dealer, auction, or a private individual. Here
they have to follow the conventional car buying process where you have to do following
things-
 1. Conduct thorough research
2. Consider financial options
3. Make purchase
4. Register and insure vehicle
But in this process buyer don’t get any Guaranteed Future Value (GFV) on their car
purchasing. In that point TOYOTA launched a new customer centric car purchasing
process where buyers of a car will avail a number facilities which differentiate TOYOTA
in competitive market segment.
TOYOTA Access program is available to both personal and business customers, it comes
with a fixed interest rate and locked repayments as standard. It puts owners in control of
their future if their circumstances change, with trade, keep or return options. With the
certainty of a Guaranteed Future Value (GFV), owners will know that at the end of their
loan term they won’t owe more than their car is worth (subject to fair wear and tear and
agreed kilometers being met). And the shorter loan periods and lower repayments mean
they can keep reliving that new car feeling every few years. So here following steps are
followed-
– Choose Toyota model
– Choose the deposit buyer want to pay (if any)
– Choose loan term (up to four years)
– Estimate the number of kilometers you expect to travel by the end of the term,
including any already on the clock (End Odometer)
– Choose if you like to pay weekly, fortnightly or monthly
TOYOTA Finance calculates the GFV for Toyota, with the final payment equal to GFV.
TOYOTA team then finalize buyers loan package, with a fixed interest rate and
repayment schedule that has been tailored to suit buyer needs. From the time they drive
away, they’ll enjoy lower repayments^ and the reassurance of knowing what lies ahead.

Note: {Toyota Access, with its lower monthly repayments^ and Guaranteed Future
Value*, is the secured car loan for new, eligible demo, and Toyota Certified Pre-
Owned Vehicles that lets you live for today while taking care of tomorrow.}
Note:{ Based on our chart above, it’s between 3.17% and 13.76%, depending on
your credit score.}

B. What are the factors behind introducing No-Haggle pricing strategy in TOYOTA Access
program?

Ans: According to the Toyota Company, the “Access Toyota” program is an attempt to
counter long-standing consumer dislike of negotiation during the car buying process. The
decision to introduce the program was based on more than ten years of focus groups that
found only a minority of car buyers actually enjoyed negotiating the price of their cars –
an estimated 14% to 20% - while most people strongly disliked the process. Another
 objective of the program was to increase customer confidence and trust in Toyota
dealerships since, although consumers consider Toyota’s vehicles to be among the top in
quality, they tend to rate their experience at the company’s showrooms as negative.
Toyota summarized the purpose of the program as one which would enrich and improve
purchase and ownership experience.
Under the Access program, Toyota encourages its dealers to sell each of their vehicles at
a fixed price or “access price”, which is disclosed through the company’s website.
Dealerships in a defined geographic area (typically a province) determine the access price
on a monthly basis via an electronic poll: each dealer submits a suggested selling price
for every model they offer based on local market conditions. All prices are averaged into
one price for each model and this price becomes the access price.

C. Why Toyota kills no-haggle price from their Access program?

Ans: We think the reason behind killing no-haggle price are followings-

 It initially reduced the number of car sales as people will take time to cope-up with the
new buying system.
 It encouraged potential customer to switch, who think they can get the best price through
bargaining, in the competitor’s brand.
 It discouraged the dealer's effort on Marketing
 It kept Toyota’s sales constant but made a rise in the sales of the competitor’s.
 It increased service costs which ultimately hampered Toyota’s profitability.
Links:
https://www.carsales.com.au/editorial/details/buyers-flock-to-toyota-access-financing-
39055/
https://jalopnik.com/heres-the-problem-with-those-no-haggle-dealerships-1819136476
https://www.toyota.co.nz/about-toyota/toyota-news/2018/april/the-drive-happy-project/