Toyota’s Carter: New Showroom Tactics Needed; Still Life Left in Scion

SAN FRANCISCO – If dealers want to draw more Millennials, women and minorities to their showrooms, they not only must change sales techniques but also may have to modify hiring and compensation practices, says Bob Carter, senior vice president-Automotive Operations for Toyota Motor Sales U.S.A.

Speaking on a wide array of topics at the J.D. Power Automotive Summit here, Carter also says the automaker’s Mirai fuel-cell vehicle is an out-of-the-box hit, pledges a turnaround for the Scion brand and says his company will follow the current market trend with a truck push in the U.S.

Although Carter predicts a rise in sales for Toyota this year to 2.4 million units on the strength of 12 new or refreshed products, he admits to being concerned about changing retail patterns that are shifting the U.S. customer base in new directions.

He points to the increase in women buyers, who account for 62% of sales, the rising purchasing power of African Americans and Hispanics and the growing ranks of Millennial customers as retail challenges auto companies and dealers need to solve.

Internet-savvy Millennials now account for 26% of sales, he says, forecasting that by 2020 penetration will reach 40%.

“We must engage them on their level through the use of technology,” Carter says, pointing to their reliance on social media, which they access on their smartphones an average 43 times a day.

Dealers also may need to hire more women and minorities for their sales and support staffs if they want to better appeal to those customer groups.

“Dealers need a management and sales team that looks like its buyers in gender, age, race,” he says.

“To attract Millennials, you can’t expect to work them 16-hour days,” he adds, saying more salary-based, less commission-oriented sales positions, plus spiffs, may be needed to build a younger sales team. “I am already seeing some dealers doing (this) and seeing success.”

Carter draws applause from the largely dealer-based crowd here by saying Toyota won’t practice stair-stepping, where it rewards retailers increasingly for hitting monthly volume milestones. The method is criticized for forcing dealers to sell cars early in the month often at a loss to get to the volume bogeys where profits are higher.

“When I was a dealer I hated it,” he says. “I gave away cars for the first 20 days hoping I could get the brass ring (at the end of the month). We don’t do them and we won’t do them.”

Carter also says Toyota has not given up on the Scion brand, which will exhibit two new models at the New York auto show this spring.

“The product pipeline from here on out is very robust,” he says. “Frankly, Scion didn’t have as successful year as Toyota (in 2014) because of product cycle. But that’s going to change.

“We do believe in it,” he adds. “We’re starting with New York and will keep going into 2016 and 2017. Scion is going to look better than fine.”

Considered an early winner is Toyota’s new Mirai fuel-cell vehicle, which he says garnered 1,500 orders in its first month on the market in Japan, four times the initial annual target for the car. In the U.S., Toyota has attracted 16,000 hand-raisers, Carter says.

Meantime, he’s been disappointed by comments from electric-vehicle-maker Tesla’s CEO, Elon Musk, who has called fuel-cell vehicles “fool-cell” vehicles. “But if I had all my eggs in one basket, I might be making the same comments.”

Although falling gasoline prices are pushing fuel economy down the list of considerations for American car buyers, Carter doesn’t expect any backsliding from the U.S. CAFE goal of 54.5 mpg (4.3 L/100 km) by 2025.

“We don’t see any indication that’s going to take place,” he says. “In fact, I think the industry will take the position that it doesn’t want to see that happen. Because to meet (the standard), it takes massive investments, (and) the industry is making those massive investments today. So we can’t see the industry wanting to change the goalposts.

Meantime, “clearly the market has shifted to trucks,” he says. “And as gas prices remain low, we will follow the market. That’s what we’re going to produce.”

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