Voices

Toyota New Zealand is stepping back to go forward

10 Oct 2016

Richard Bosselman 2

Toyota New Zealand is importing 'used' Prius PHEVs from Japan to sell in New Zealand... and they're selling like hot cakes

Toyota New Zealand is importing ‘used’ Prius PHEVs from Japan… and they’re selling like hot cakes says our man from across the ditch.

SO, YOU ALL know that New Zealand has been a haven for used cars out of other countries, mainly Japan, for almost three decades now.

Basically, we now have two booming car trades; one for factory-fresh – which is going great guns, by the way – and the other for product set to embark on a (generally) second life cycle. Also a booming trade in our positive economic climate.

These operations mainly run parallel, with one exception. In addition to being the country’s most successful new vehicle seller, accounting now for around one in every four passenger sales annually, Toyota New Zealand also stands out as the only national distributor that bothers to bring in ex-Japan used stock.

Now in its 15th year, Toyota’s ‘Signature Class’ has been a huge success, mainly because TNZ only chooses decent stock and also because it lends after-market support, warranties even.

How big? If it was to be considered a separate ‘brand’, then transaction count in 2015 would have placed it at No.7 on the new car registrations top 10, squeezing between Hyundai and Nissan.

There’s clearly good money in it. TNZ does not discuss its revenues, yet it appears this business contributes around 20% of its annual earnings. The distributor says 49,000 Signature Class cars have hit the road since the program’s launch.

That’s just a small percentage of the overall national used car business, of course. Kiwis are inveterate pre-owned vehicle traders, starting keenly in the mid 80s’ when tariff relaxations allowed imports. The hobby became really serious when the car assembly industry departed in the late 1990s. Now, of the 3.5 million cars here, at least half have arrived with ownership history.

More than one million public-to-public transactions occurred in 2015, also a boom year for new vehicle registrations and imports – we saw 152,000 of the latter cross our borders, versus 134,000 new registrations. Every home has, on average, at least two cars. That’s great, yeah? What’s not so hot is that propensity for buying cheap continues to push out the average fleet age. Thirty years ago, the car age average was just under 10 years. Now it is out to 15.9.

Anyway, Signature Class doesn’t just shift imports. The greater part of its business, these days, is as a specialist in refreshing that brand’s NZ-new product, mostly fleets and rental fare returned to the mothership under buy-back agreements.

So, in a nutshell, it sells used cars from Japan. And it sells used NZ-new product, in an as-new state. Now here’s a new twist: As of last month, Signature Class became a conduit for a used car being sold in place of a new one.

That car is the Prius. Not the regular hybrid car – we’ve thousands of those, again mainly used imports rather than NZ-new (even the gen 1 types that weren’t ever supposed to leave Japan). It’s the PHEV: the generation three plug-in rechargeable one that you don’t see as a new product.

Actually, neither did New Zealand. The distributor dabbled, but the outcome of a trial that saw a handful of examples running around, some with a big university, was that it was too pricey. So they decided to await the next evolution, the Prius Prime, a version of the new gen four line, revealed at the last New York motor show.

Maybe you know what happened next. Two things, first Japan determined, at the 11th hour, to restrict Prime to its home turf and North America. Then, more recently, it announced the model, due was now not – due to unexplained technical difficulties – coming on sale until 2017, with 2018 being the earliest chance for NZ play.

That wasn’t what TNZ wanted to hear, not least because earlier this year the New Zealand Government finally announced its long-awaited, long-overdue electric car strategy; that aims to incentivize – through ‘education’ rather than the tax breaks they really require – EV ownership, with the hope of having 64,000 on the road by 2021.

What’s an electric car? TNZ is the clear hybrid market leader here, but so what: Transport Minister Simon Bridges says only cars that have plug-in recharging capability and are up to prolonged driving on electrical urge alone count, not those thousands of Toyota and Lexus hybrids already here.

Being pushed back to zero annoyed TNZ, but it knew this was an argument it couldn’t win. It also knew that, for the sake of its public credibility, it needed to join the emergent electric car movement and mix it directly with the Renault Zoe and BMW i3 (not the Nissan Leaf, that was pulled at the start of the year after being undercut by import examples), plus of course those models that mix electric and fossil fueled propulsion (Mitsi Outlander, Audi A3 e-tron, some i-Performance BMWs and some ‘e’ Mercs). But what with?

The answer is to step back into history; delivering the gen three Prius PHEV that’s been off-sale in Japan for a year now, but there are plenty of low-mileage used examples. So, Toyota New Zealand is kicking off into a new future with an old car with somewhat outdated technology. Yes, it seems weird – even in a country where whacky is the norm for car stuff – on several counts.

It looks old and has old tech. Ability to run an optimum 26kms on battery alone means it has the most modest electric-only range of any PHEV and EV sold here.

Also, despite being fettled for NZ – with local audio and reversing camera, dashboard displays converted from Japanese to English (so too the owner’s manual) – and even though TNZ only takes the best examples, restricting to product of four years’ age or less and with no more than 25,000kms’ on the clock, you’re still buying a used car. A brief drive also reminded that, as a driver’s car, the gen three Prius is pants.

However, there are huge attractions: A five-year warranty, including battery and powertrain, odometer certification and an Automobile Association compliance check is great, but the real pull is the probably the price. At between $30,000 and $40,000, these cars provide the cheapest entry yet into electric driving, being between half and two thirds the price of a brand-new rival.

Will it work? Seems it already is. Having originally determined that it wouldn’t need more than 50 units to meet demand for the remainder of the year, TNZ has already doubled that order and will probably double it again in 2016.

Private buyers are keen, of course, but the biggest buyer base might be organisations that normally restrict to brand-new product: Local municipalities and central Government are being lured by the low cost and strength of TNZ’s backup commitment.

There is one catch for the civil servants. Our Government fleet use rules are big on health and safety and dictates passenger vehicle choices narrow down purely to those sporting five-star ANCAP scores.

The regular gen three Prius has the right credentials. But the PHEV? It’s never been tested outside of its home market, whose ratings don’t cut muster here. So it requires an ANCAP score and TNZ doesn’t want to play. Its strategy, being undertaken now, is to convince that the battery-first model is just as smashing – without being smashed.

Says spokesman Morgan Dilks: “We are working with Toyota Japan on acquiring technical data which will be used to support a proposal for ANCAP five star consideration for the Prius PHEV.” 

So, anyway, this idea of selling a ‘used for new’ – initially conceived as a stop-gap, a way of provisioning the sector until the Prime was here – is now being rethought.

TNZ says it might well keep selling the Gen Three PHEV alongside the Prime for as long as used stock remains available. Like I say, there are plenty around; three years ago Prius PHEV sales in Japan shot up dramatically when they became subject to an incentive scheme to spur a flagging domestic car market.

So, yeah, we’re a bit crazy. But not wholly. Despite its Signature Class success, TNZ is still primarily a new car seller and it assures it plans to stay that way. Pushing a used car as a new car substitute is a means to an end, not a policy change.