Toyota Motor Sales U.S.A. Inc. does not plan to add many more dealers in the United States, even though the Japanese automaker's U.S. sales continue to grow, Toyota North America President Jim Press said today.
The reason: The automaker wants all its dealers to be profitable so they can spend money on customer service and store upgrades.
"Our dealers have made massive investments," Press said in an interview with Automotive News. "Adding more dealers just dilutes their investment."
Toyota has placed its U.S. dealers based on customer convenience, not just to increase sales, Press said. Adding more Toyota and Lexus dealers would just encourage price-cutting competition among dealers within the brand, at the expense of customer service, he said.
The size of Toyota's U.S. dealership network has been stable during the past several years.
On Jan. 1, Toyota Motor Sales had 1,445 franchises in the United States - 1,224 Toyota-Scion franchises and 221 Lexus franchises. A year earlier, Toyota Motor Sales had 1,430 franchises: 1,215 Toyota-Scion and 215 Lexus.
Yet Toyota Motor Sales' U.S. sales grew by 282,230 units, or 12.5 percent, in 2006 compared with a year earlier.
Each Toyota/Scion franchise sold an average of 1,821 units in 2006, up 12.9 percent from a year earlier. Each Lexus franchise sold an average of 1,479 units, up 3.7 percent.
Press said modern Toyota stores are "giant corporations" -- and will get bigger. He said the Toyota dealership of the future will be more stable, with less employee turnover, and get greater efficiencies from its service department.
"Dealers have got to be able to make a profit or they can't make investments for customer satisfaction," Press said.
At the same time, Toyota also does not expect the growth of its U.S. sales to continue at the breakneck pace of the past few years.
Because it had launched the Prius hybrid in the United States and had the image of a lineup of fuel-efficient cars, Toyota was a big beneficiary of consumer shock as gasoline prices soared above $3 a gallon in the wake of Hurricane Katrina in August 2005.
But a growing number of competitors are now launching their own vehicles with fuel-saving technologies and improved quality, Press said, making them more competitive.