Toyota cars used but not abused
TOYOTA has moved to bring its massive second-hand car fleet in-house and arrest a trend towards internet-based private sales by announcing its own program to "certify" used cars.
The company will offer a 12-month, 50,000km warranty on second-hand Toyotas that are less than four years old or have travelled fewer than 100,000km and have passed a 90-point inspection program.
Significantly, the program also includes petrol-electric hybrid cars such as the Prius and Camry Hybrid, which will be subjected to a specific examination including the hybrid transaxle, control modules and the battery.
Toyota will also provide buyers with a detailed history of the car including any encumbrances, plus 12 months of roadside assistance.
Similar certified used car programs have been around for years - Holden has had one since the early 1990s, albeit without the roadside assistance component that many others include - and Toyota joins a dozen other manufacturers and importers to offer such incentives to second-hand buyers.
They include Audi, BMW, Chrysler, Honda, Hyundai, Jeep, Mercedes-Benz, Mini, Mitsubishi, Peugeot, Renault and Volvo.
However, Toyota's move carries extra significance as it sells nearly twice as many cars as its nearest competitor, Holden, last year unleashing more than 181,000 new cars on to the Australian market.
Mark Ward, an automotive consultant for accounting firm BDO, said car manufacturers would be keen to counter a sharp trend towards buying and selling cars privately via internet advertising.
"It helps with peace of mind for consumers in a used car market these days which is dominated by internet players, and a lot of that is in the private market," he said.
"The percentage of used cars sold by dealers as opposed to private-to-private is declining all the time so this is another way to help claw back some of that lost market share."
Nick Adamidis, the national sales and marketing manager for industry analyst Glass's Guide, said Toyota's entry into used car certification is both "an excellent additional service" for consumers, and a valuable brand-building opportunity.
It is epxcted to push up resale values (RV) on second-hand Toyotas, although he said it's difficult to quantify by how much.
"You'd expect the vehicles that are certified to get a premium, but it depends on the percentage of cars sold through a dealer as opposed to private," he said.
"There might be a one to three per cent increase in RVs for those vehicles above private. It would widen the gap between the private seller and the dealer with all the extra warranty and the rest.
"It depends on the market acceptance. But these guys are brilliant at marketing, so it should do really well."
Adamidis describes offering a certified used-car program as "pretty smart business".
"It highlights the vehicles that they know have had less problems. Especially adding the extra warranty, that's a significant de-risking of a used vehicle purchase," he said.
"So the consumer doesn't require as heavy a discount because of that - if a transmission blows up, I'm not going to have to pay four grand for it.
"All that comes into the buyer's decision making when you're buying a used car, and all that expected discounting goes out the window."
Ward said he would be surprised if other car makers - such as Ford, Mazda and Volkswagen - didn't instigate a certified program following Toyota's move.
"It's not a hard program to implement. It's about branding, additional safety checks, so it's not a difficult program to get up and running," he said.
"It helps with repeat business, it also helps the manufacturer to drive business to their dealer network."