Brexit threatens to undermine rapid growth of the main motor distributors in Ireland
In a highly-competitive but flat market, Toyota's Michael Gaynor explains the brand's marketing strategy to John McGee
With a 10.5pc share of the Irish new car market in 2016, 47 dealers around the country and more than 390,000 people driving one of its cars, Toyota been one of the biggest selling brands in the highly competitive car market over the past 30 years.
Vying with the likes of VW, Hyundai and Ford in the top four motoring brands over the past few years, Toyota Ireland's marketing director Michael Gaynor has played a key role in positioning the brand at the top end of the market.
As the year draws to a close, how did the overall market perform?
"The first six months of 2016 were extremely buoyant and the market was up 30pc in January alone. Everyone within the industry was predicting that the market would sell between 165,000 and 170,000 cars for the full year. But things started to change mid-year and the market has been flat ever since and will end the year at around 147,000 cars.
"But this is up on the 125,000 cars in 2015 so it's an 18pc increase which is still very good, but next year is going to be a big challenge for the industry and it's difficult to call. At best, we expect it to be flat for the year."
Why is this?
"Brexit and consumer confidence. The industry, along with others, is greatly impacted by Brexit because of imports and the exchange rate. Second-hand imports into Ireland have been increasing because the exchange rates make it more affordable for traders to start bringing in used cars from Northern Ireland and higher priced cars from the UK.
"All of this affects the residual value of existing stock because what it does, in simple terms, is that it increases the cost of changing a car for somebody who wants to buy one in the Republic. When they go to trade in their old car they will realise that, because of all the imports coming in, the actual re-sale value of their car is not what they thought it would be and this then has an impact on their finances. It's becoming a big issue for the industry.
"But our message would be that consumers need to tread with caution when it comes to bringing in an imported car, particularly when it comes to back-up and servicing. In addition, they are also losing out on some of the attractive consumer offers that are out there if they buy a new car from a dealer, particularly when it comes to things like scrappage and finance because there's some really good deals out there."
What the single biggest trend in the marketplace at the moment?
"Ireland has become an SUV market. Nearly one in four cars being bought in the Irish market are SUVs which is quite phenomenal. Three years ago, it was in the low teens so, if you will excuse the pun, it has really accelerated over the last few years.
"It's largely down to consumers changing habits and perceptions about SUVs and it's not just an Irish phenomenon. The reality is that people want to feel the high-rise driving experience they can get from an SUV. They are also strong on aesthetics and styling and people like that.
"From Toyota's perspective, we have the RAV 4, which is our primary SUV and then we have just launched the C-HR SUV, a 5 door which is positioned slightly before the RAV 4. It would be a direct competitor to the Nissan Quashqai and the VW Golf, for example. So, with the C-HR, we would hope to significantly grow our share of the SUV market next year."
How have product recalls impacted on the brand?
"Recalls are part and parcel of this industry and, if anything, we should be encouraging them more. Toyota has always had policy of complete 100pc transparency; it's in our DNA. Our vision is to have zero accidents by 2050 and to achieve that we want to be open and transparent in everything we do. Unfortunately, some brands don't go public and they do them under the radar but that's not the way Toyota operates.
If there is any issue, no matter how small it is, we will not hesitate to do a recall. But in the grand scheme of things, of all the recalls that were done in Europe last year, Toyota only accounted for around 5pc. Do recalls mean that we build less quality cars? Absolutely not. Recalls are an important and necessary part of the industry."
Toyota recently changed its long-standing brand proposition. Why?
"Our brand statement was 'the best built cars in the world' and we've moved to a new brand statement which is 'built for a better world' because that's what we represent. Yes, we still sell cars that are the best built in the world - and that's been a key the differentiator for Toyota over the last 20 or 30 years - but time moves on and so have consumers. We need to a new story about what Toyota is and what it stands for. Yes, we do sell cars but everything we do is for the greater good in terms of our purpose in making life better for Irish people.
"There are 390,000 Toyota owners on the road and not only do we have a responsibility to them, but we have a responsibility to everybody."
Does the future of motoring lie in electric or hybrid cars?
"We are a hybrid brand, we are a hybrid company and that is the future for us. We sold 2,000 hybrids in 2016 and this compares with 200 electric cars which were sold this year. Toyota revolutionised hybrid and 20 years ago we invented the Prius and we were ridiculed and the industry said that hybrid cars would never take off.
"We have been proved right and every car brand now is launching hybrid. The vision for Toyota back then was to develop more fuel-efficient cars but, more importantly, cleaner air for everyone and that's still the ambition."
Sunday Indo Business