NAGOYA, Japan -- Toyota Motor will revamp its domestic network of 5,000 dealers and add services like vehicle-sharing, moving to reduce its dependence on new-cars sales as Japan's auto market shrinks.
Toyota on Thursday explained to its dealers that it is doing away the divides that separate different sales channels and let all outlets sell any model. The move is part of a business strategy designed to prepare the automaker for a new era where access to cars is valued over ownership.
The automaker has 5,000 dealers under four separate sales channels. Toyota will tap the fleet of roughly 40,000 vehicles those dealers keep for test-driving to start a vehicle-sharing service next spring, starting in major cities like Tokyo before a nationwide roll-out. Customers will be able to reserve, pay and unlock vehicles all with their smartphones.
The "mobility as a service" market, as it is called, in the U.S. and Europe is expected to grow 24% per year through 2030 to $1.5 trillion, American consultancy PwC Strategy& estimates. Japan's new car sales, meanwhile, have shrunk 30% from 7.78 million units in 1990 to 5.23 million units last year. When the national consumption tax rises next fall, the market is likely to decline even faster.
"We cannot survive as is," said a Toyota executive, explaining the decision to review the domestic sales strategy.
Toyota will thus end its dealership model of over 60 years. Four separate channels -- Toyota, Toyopet, Corolla and Netz -- currently sell different vehicles that cater to different market segments. The automaker will now make all models available at each chain starting in the early 2020s -- the luxury Lexus brand excepted. It will also halve its domestic lineup to about 30 of its most popular cars around 2025.
Toyota dealers in the same area must now compete to survive, differentiating themselves with new roadside services. In addition to car-sharing, the company is considering attaching services such as convenience stores, home delivery operations and cram schools to existing facilities.
A Toyopet dealership in Nagoya, for instance, installed a cafe offering coffee and sweets at its redesigned store this month. A Corolla dealer in Osaka sells such items as camping goods together with its cars.
"Toyota must innovate or fail," said the executive. To that end, the company is trying to turn its 5,000 dealers into assets for services like car-sharing before they become a burden.