Summary of "Dealer viewpoint: How Toyota Is Dealing With Market Changes | Episode 189"

Summary of Business-Specific Content from “Dealer viewpoint: How Toyota Is Dealing With Market Changes | Episode 189”

Presenters/Sources

Vu Gwyn (Host, PCA Insider)
Martin Simon (General Manager, Orsman Toyota dealership)
Manny and Damon (PCA Insider crew)
References to Ed Weaten (Senior Toyota executive)
Additional mentions: Tyler (Chavis Performance Engineering), Steve Postal (General Manager, Porsche Valley)

Key Themes & Insights

1. Automotive Dealership Operations & Management

Inventory Scarcity & Dealer Collaboration

Toyota dealerships face significant vehicle scarcity despite factories running at 107% efficiency.
There are approximately 1,246 Toyota dealers in the U.S., compared to 3,600 for Chevy, contributing to limited inventory.
Dealers rely heavily on trade relationships to source vehicles for customers (e.g., only one matching vehicle found within 250 miles for an employee).

Customer Education as a Pillar of Sales

Educating customers on hybrid and EV technologies is critical to building perceived value and overcoming skepticism.
Many customers don’t realize they are buying hybrids because the experience and branding are subtle (e.g., Camry hybrid looks and drives like a regular car).
Education about ownership costs, maintenance, and vehicle capabilities is essential, especially for new technologies.

Ordering vs. Lot Sales

There is an increasing trend of customers reserving or ordering vehicles before arrival rather than buying off-the-lot.
Post-COVID, customers prefer ordering “dream cars” with custom options rather than accepting dealer-stocked vehicles.
Dealers still tend to stock more conventional colors (black, white, silver) due to market demand (~70-85% of cars sold in these colors).

Pricing Strategy & ADMs (Additional Dealer Markups)

Toyota dealers generally avoid ADMs to maintain fair customer treatment and long-term relationships.
Some limited ADMs appeared on high-demand models like the GR86 due to supply constraints.
Dealers acknowledge that customers paying ADMs bear responsibility for the markup.

2. Product Strategy & Market Trends

Sports Cars vs. SUVs

Sports cars (e.g., [[Toyota GR86](https://www.amazon.com/dp/B0B2V1K91G?tag=dtdgstoreid08-20)](https://www.amazon.com/dp/B0B82G5PY5?tag=dtdgstoreid08-20), Supra) represent a very small volume compared to SUVs like RAV4, Highlander, and Sequoia.
SUVs are the bread and butter for Toyota and Porsche dealerships.
Enthusiast sports cars are often not profitable volume drivers but important for brand heritage.

Collaborations & Platform Sharing

Toyota’s collaboration with BMW (Supra) and Subaru (GR86) was strategic and aligned with brand DNA—focusing on performance vehicles.
Porsche historically partnered with Toyota-inspired Kaizen experts to improve manufacturing efficiency without losing brand DNA.
Platform sharing can accelerate product timelines and reduce costs but must align with brand identity to be accepted by consumers.
A hypothetical Toyota-Porsche collaboration (e.g., new MR2/914) was discussed as exciting but unlikely given Porsche’s VW family ties.

Transition to Electrification

Toyota is heavily invested in hybrid technology as a bridge between ICE and full EVs.
Toyota’s hybrid models maintain strong sales due to reliability and fuel efficiency.
EV-only models (e.g., Toyota BZ4X) face more depreciation concerns due to uncertainty about battery replacement costs.
Porsche’s move from ICE Macan to EV Macan is challenging; hybrid options could be a better transitional strategy.
Dealers see hybrids as less intrusive to customer lifestyle compared to full EVs or plug-in hybrids.

Sedan Market Decline

Sedans are disappearing from many brand lineups due to shifting consumer preferences toward SUVs and crossovers.
Example: Chevrolet discontinued the Cruze and Malibu, shifting focus to SUVs.
Toyota’s Camry remains strong, especially with hybrid options.

3. Manufacturing & Supply Chain Insights

Just-In-Time (JIT) & Kaizen Manufacturing

Porsche adopted Toyota’s Kaizen continuous improvement and JIT inventory strategies in the 1990s to save costs and improve efficiency.
Resulted in significant cost savings (e.g., 993 model priced $5,000 less than predecessor 964).
Modern manufacturing uses robotics and computerization to deliver parts exactly when needed, reducing inventory costs and improving quality.

Tariffs & Geopolitical Impact

Tariffs and trade agreements affect import brands like Toyota and Porsche.
Toyota mitigates this by manufacturing 80% of vehicles sold in the U.S. domestically.
Dealers feel underinformed about high-level trade negotiations, which are handled by manufacturers.

4. Customer Behavior & Market Dynamics

Enthusiast vs. General Buyer Dynamics

Enthusiasts are vocal but represent a small portion of buyers.
Many buyers of new sports cars or EVs are new to the brand or less connected to heritage.
Dealers must interpret and market vehicles effectively to both enthusiasts and new customers.

Ownership Patterns

Toyota owners tend to have very long ownership cycles, often driving vehicles for 10+ years with high mileage.
This contrasts with some enthusiast Porsche owners who may keep cars indefinitely regardless of resale value.

Manual vs. Automatic Transmission Sales

Manual transmission cars take longer to sell than automatic/PDK models.
Younger generations show less interest in driving manuals, influenced by ride-sharing and changing transportation habits.
Modern automatics often outperform manuals in performance, shifting enthusiast perceptions.

5. Actionable Recommendations & Frameworks

For Dealerships

Build strong inter-dealer relationships to overcome inventory scarcity.
Focus on customer education to increase adoption of hybrids and EVs.
Avoid aggressive ADMs to maintain customer trust and long-term value.
Leverage ordering systems to capture customer preferences and reduce lot inventory risk.

For Manufacturers

Consider hybrid technology as a critical transitional product before full EV adoption.
Use platform-sharing partnerships strategically to maintain brand DNA and accelerate product development.
Continue investment in JIT and Kaizen manufacturing to reduce costs and improve quality.
Address market demand for SUVs while maintaining niche sports car offerings to preserve brand heritage.

For Enthusiasts & Buyers

Understand total ownership costs, especially for used sports cars with known maintenance needs (e.g., Porsche M96 engines).
Prioritize vehicles that have been regularly driven and maintained over low-mileage “cream puff” cars.
Be realistic about color and option availability due to market demand trends.

Key Metrics & KPIs Mentioned

Toyota factories running at 107% efficiency.
Only one matching vehicle found within 250 miles for a specific employee order.
Number of Toyota dealers in the U.S.: ~1,246 vs. Chevy’s 3,600.
Color preference: ~70-85% of cars sold in black, white, or silver.
Ownership cycle: Toyota owners often keep vehicles for 10+ years with high mileage (example: 2012 Tacoma with 150,000+ miles).
Porsche 996 Turbo power: ~415 hp stock.
[Toyota RAV4](https://www.amazon.com/dp/B0CGHMG97B?tag=dtdgstoreid08-20): #1 bestselling vehicle globally.
Fall PCA raffle prizes: 2026 911 GTS + $35,000 cash; 911 Carrera + $35,000 cash.

Additional Notes

Discussion included the Porsche Mobile Charger Plus lawsuit related to throttled charging amperage.
The evolution of Porsche and Toyota’s product lines was discussed in the context of electrification and market shifts.
Enthusiast culture and community organization have grown with the internet and social media.

This episode provides a comprehensive dealer-level perspective on how Toyota is navigating market changes, supply constraints, electrification, customer education, and product strategy, with parallels drawn to Porsche’s own challenges and adaptations.

End of Summary