Toyota cancels all new car dealerships in Germany

Article by Christian A., on May 11, 2015

The contracts of each of Toyota’s about 500 new car dealerships in Germany have been canceled effective May 31. The automaker is setting up a one-tier network as it hopes to stop a sales decline in the market. Thomas Schalberger, the head of Toyota Germany communications, said that the automaker wants to set up this network by June 1, 2016.

He said that letters of cancellation were sent to new car dealerships last Monday. Drafts that outline the partnerships based on new-car agreements were sent together with the cancellations. However, not all of the dealers received them.

Schalberger said that over the next 12 months, the dealerships will need to adapt their structures to the changes in market conditions. He said that the target is to have around 400 new car sales points in this country as of the summer of 2016.

Toyota wants to make the network become more profitable as well as have greater profitability for each location. He emphasized that the cancellations will not have an impact on the parts and service area. Germany chief Tom Fux took it upon himself to personally contact dealerships in Germany to explain the network restructuring.

Last year, Toyota posted sales of 70,267 passenger cars in Germany -- 5.1 percent lower than the total for 2013. This meant a decrease in market share to 2.3 percent. A few years ago, Toyota had set a goal to get a 4 percent market share.
Meanwhile, rival importers like Hyundai (with 3.3 percent) and Seat (with 3.1 percent) have outdone Toyota. Even Nissan and Mazda are fast catching up with it.

As the Germany auto market grew 6.3 percent in April, Toyota’s sales declined by 6.4 percent, said the German Federal Transport Authority. Toyota’s four-month sales fell 8.7 percent in a market that grew 6.4 percent.

Months ago, it was revealed that Didier Leroy was to leave his job as chief executive of Toyota Europe to become Toyota Motor Corp.’s first non-Japanese executive vice president as well as the second non-Japanese executive on its 12-member board.

Leroy was named as top honcho of Toyota’s operations in Europe in July 2010, targeting to return the unit to black in the fiscal year 2013-2014. Amazingly, Leory was able to achieve this a year ahead of schedule. In fact, Toyota Europe logged a 54-percent surge in operating profit to JPY66.4 billion (EUR519 million) in the first nine months of Toyota’s current fiscal year ending March 31, 2015.

Under Leroy’s leaderships, Toyota and Lexus were able to log sales increase for four years in a row.

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