When UMW Toyota said they would be transferring most of their branches back to dealers, it was met with mixed reactions. In 2020, is it any different?
To understand the significance of this relatively minor piece of news, we need to go way back to late 2017 and 2018 when UMW Toyota first announced that they would begin transferring many of their branch retail operations to dealers and other relevant parties. For those who don’t understand why this would be the case, UMW Toyota is the local distributor for Toyota products, but in the past, it also happened to own a great number of dealerships as well.
This happens to be a pretty rare situation, as in many other countries and with other brands, there is a separation of roles between a distributor and a dealer. A distributor’s job is to, well, distribute products to a network of dealers, as well as to develop overall brand strength, invest in advertising and so on. The dealers in turn take on the actual job of retail and service – an incredibly expensive endeavour, but one that can also be financially rewarding if executed properly.
The reason why this presented a problem for UMW Toyota is that having its own significant network of dealers led to eventual accusations of bias and preferential treatment for their own dealerships, and you can’t blame someone for coming to this conclusion. Bias and preferential treatment can come in the form of stock allocation (hot selling models go to their own branches), or it can even be the fact that dealerships not owned by UMW Toyota would have to pay for their vehicle allocations in cash.
As Toyota’s operations have shifted significantly in the last few years, dealerships have progressively been transferred to dealers in an effort to level the playing field in a way. In turn, UMW Toyota has had to step up their support as a distributor to help these dealers move product and it has helped them to streamline their operations and focus their efforts.
The latest piece of news regarding this endeavour going on three years is that Laser Motor PJ Sdn Bhd will be taking over the Section 19 PJ outlet and Cheras outlet from here on out, taking two key dealerships in the Klang Valley. In doing so, there is also more flexibility for a dealership to operate in the way that they choose, and more flexibility in how they want to sell a car to customers.
That being said, the initial reaction to this news was heavily controversial as we mentioned earlier. In a way, some felt that UMW Toyota was pulling back and abandoning dealerships as a whole – not merely their own. But three years have passed and UMW Toyota has shown their network of dealers that they are still very much alive and kicking, and ready to provide as much support as they can.