TOKYO — With Latin America’s economy imploding around him, Toyota Motor Corp.’s regional CEO had two choices.
“We could wring our hands about the things we can’t control or we get creative and rise to the challenge,” recalled Steve St. Angelo, the U.S. manufacturing veteran tapped in 2013 to turn Toyota and Lexus from also-rans to top contenders in Latin America.
To get creative, St. Angelo turned to the pages of Automotive News.
St. Angelo, inspired by this publication’s dealership Best Practices series, challenged his Latin American dealerships to brainstorm ways to improve retailing.
Toyota Motor is just beginning to crack the Latin American market, and one way to gain traction is to improve its dealership network there.
St. Angelo didn’t balk at tapping advice from competitors. Nor did he flinch at pushing Latin American dealers and salespeople — many of whom do not speak English — out of their comfort zones. So they were required to read a 48-page Best Practices supplement that Automotive News and Ally Financial produced last year, adopt one idea and rework it for Latin America.
At a Nov. 18 awards ceremony in Tokyo, St. Angelo celebrated the top 10 of some 400 best practices that the company’s local dealerships are rolling out.
The finalists launched self-improvement programs covering everything from new delivery centers and charity outreach programs to special accessory packaging and solar-panel roofing. The winners came from Argentina, Bolivia, Brazil, Colombia, Costa Rica, Guatemala, Nicaragua, Paraguay and Peru.
Inspiration came from the best practices of American dealers selling vehicles from Hyundai, Nissan, Buick, Porsche, Ford, Chevrolet, Honda, Volvo, Cadillac, Lincoln and Infiniti. One company’s brands were conspicuously absent from the list of U.S. dealerships whose best practices were tapped: Toyota Motor.
“We can learn from each other, but we can also learn from our competitors,” St. Angelo said. “They had to go to the magazine to break the paradigm.
“I want us to stay humble and realize there is always a different, better way of doing things.”
St. Angelo’s gambit aims to strengthen Toyota Motor’s operations as it battles Latin America’s economic slowdown. It also serves notice to rival manufacturers that the world’s biggest automaker is getting serious about a market it has long neglected but one in which it sees tremendous growth potential.
When St. Angelo arrived in the region, Toyota and Lexus ranked No. 8 in sales in Brazil, the world’s fourth-largest market, trailing such rivals as PSA Peugeot Citroen and Fiat. St. Angelo aims to put Toyota and Lexus in the upper tier of brands by the end of the decade.
Last year, the company’s sales reached a record 403,000 vehicles in the Latin America and Caribbean region, up from 321,000 in 2012. But volume is on pace to hit only 380,200 in 2015, slightly below Toyota’s target of 381,400.
Sales have slid in part because Toyota temporarily closed a plant in Argentina to retool for production of the latest Hilux pickup, one of the brand’s best-selling nameplates in the region.
Still, Toyota has carved out a bigger market share even as overall demand contracts. Toyota Motor’s regional share stands at 8.6 percent today vs. 5.3 percent in 2012.
“It’s a tough market right now, and it’s more than likely this market will continue for a while,” St. Angelo said. “But I can’t complain when market share is going up.”
When demand finally turns up, St. Angelo hopes the dealership improvement programs will turbocharge Toyota’s turnaround.
Many dealers are seeing big returns.
Federico SA, a dealership in Buenos Aires, Argentina, noticed its customer satisfaction rate falling below the network average. The problem was a crowded and chaotic new-vehicle delivery center, caused by overcrowding in the capital city.
A solution came through looking to Burns Hyundai in Marlton, N.J., which was featured in last year’s Best Practices supplement for pampering high-end Hyundai customers with a private lounge.
Federico combined scattered delivery operations into a new and larger location, built an upscale customer lounge and added delivery specialists. It also partnered with popular consumer brands to give customers who were picking up their vehicles gift cards good at restaurants or for clothing or electronics.
“They wanted to improve their customer satisfaction index. But they just didn’t know how,” said Jeronimo Bollaert, a manager at the company-owned distributor for Argentina.
Since the changes, customer satisfaction rates have jumped above the network average, sales of accessories have surged and the dealership is even renting out the new delivery center for conventions and other special events, Federico says.
Solar power, charity drives
Dealerships in Nicaragua got similarly creative.
Auto Nica in Managua channeled an idea from Rossi Honda of Vineland, N.J., with plans to offset Nicaragua’s high electricity costs by installing a roof of solar panels over the delivery parking areas at three showrooms. The goal is to generate 90 percent of the dealership’s daytime energy needs from the tropical sun.
It also has marketing benefits.
“We want to give that green image that all companies and automakers need,” Auto Nica Vice President Carlos Sandino said, adding that the system will pay for itself in less than four years.
Meanwhile, in the city of Esteli, Nicaragua, the Casa Pellas dealership drew from the philanthropy of George Nahas Chevrolet in Wildwood, Fla.
Casa Pellas organized convoys of four-wheel-drive trucks to deliver shoes, toys, shampoo, food and clothes to impoverished, isolated areas of Nicaragua. Participants were customers who also were members of the local Toyota 4×4 Club.
The outreach strengthened ties with the community, boosted brand awareness and gave customers fresh opportunities to show off the 4×4 forte of their trucks on rugged, remote roads.
“Everybody is happy with Casa Pellas because we’re helping people in need,” said Chairman Silvio Pellas, who has been a Toyota distributor in Nicaragua for 52 years. “I don’t see anybody doing this kind of thing in Nicaragua.”