Toyota’s second-hand dreams

Motoring editor ALASTAIR SLOANE finds our leading car company making new business from the huge used car market.

Ten years ago, Toyota New Zealand looked upon the used import market in much the same way early map-makers looked upon unexplored regions: "There be dragons."

"It is fair to say that up until the mid-1990s Toyota was opposed to used imports because we were totally committed to the new vehicle industry and the structures that supported that investment," says its managing director Bob Field.

Then in 1995 things changed. Toyota realised there would be no future in local assembly in a tariff-free environment and that car sales would never return to the historical highs of the mid-80s.

So it announced a pilot study into imported and homegrown used cars - its way of saying, "If you can't beat 'em, join 'em" - and set in motion its Signature Class programme, officially launched in September 1997.

Now Signature Class is the sixth biggest franchise in New Zealand, earning $80 million last year on sales of 5000 used vehicles, 65 per cent of which were imported and 35 per cent originally sold new.

This year Toyota plans to sell 5500 Signature Class vehicles, 80 per cent of which will be imported from Japan and 20 per cent originally sold new here.

Many will be models previously unavailable here. The clearing house for Signature Class vehicles is Toyota's old Thames assembly plant, which employs about 60 staff.

Toyota believes the market for squeaky-clean approved used cars is huge, which is why it has set up a finance/leasing service with Internet support for its Signature Class operation, staring on June 1 and aimed at private and fleet buyers.

It trotted out its research at a conference at the Thames plant:

* 92 per cent of vehicle transactions in New Zealand involve used vehicles, compared with 75 per cent in the United States, 67 per cent in Germany and 46 per cent in Japan.

* Toyota brought in only 2 per cent of total used imports last year, but is business grew 39 per cent against used market growth of 28 per cent.

* There are just over 2.3 million vehicles on the road in New Zealand, that's 615 vehicles for every 1000 people, second only to the United States.

* Last year, 388,000 vehicles changed hands privately; 209,000 were sold through dealers and 139,000 used imports were registered.

"Assuming a conservative sales value of $7500 (for each car) that's an annual market of $5.5 billion," said senior Toyota executive Alistair Davis.

"That's a little more than the value of international tourism to New Zealand and just over twice what the nation spends on computers each year."

Davis says that used cars can fit into the environmentally friendly category, providing they are not outdated technologically.

"Used cars can be 'green' given some pre-conditions," he said.

"Although an individual will usually spend more on fuel for a car over a 15-year life than the original capital cost, the fact remains that the capital cost of a vehicle in terms of both the economic value invested and the amount of the earth's resources consumed is significant.

"With a world car market of around 50 million cars and a consumer cost of around $20,000 each, the annual commitment is about $1 trillion.

"If we as a planet are committing that kind of money to cars, we hope that we are spending it wisely. Ensuring that it is spent wisely means we need to prolong the life of the car as long as possible.

"That means ensuring cars are kept attractive to customers, which is better done by companies than governments.

"It means we need to prolong a vehicle's efficiency with regular servicing. And it means we should move cars to places that need them and can't or won't pay for them."

Davis said that Toyota through its Signature Class programme was moving vehicles from a comparatively rich country (Japan) to a relatively poorer one (New Zealand).

"If that offended your sense of nationhood, remember that gross domestic product per person in New Zealand is $US13,300. Japan's is $US34,400."