Toyota Aims ‘Secret Weapon’ at Rival Automakers

Bloomberg News

It’s always good to have a leg up on the com­pe­ti­tion, and Toy­ota Finan­cial Ser­vices has become just that, mak­ing it a strong cap­tive part­ner for the automak­er.

Find out what the secret weapon is, and how it works to Toyota’s advan­tage.

Toy­ota Motor Corp’s in-house lender is lever­ag­ing the automaker’s AA- cred­it rat­ing and cash to offer low rates and keep cus­tomers com­ing back.

Toyota’s $37 bil­lion cash pile and cred­it rat­ings that out­rank Gen­er­al Motors Co. and Ford Motor Co. enable its Toy­ota Finan­cial Ser­vices unit to offer more loans and take on riski­er bor­row­ers. The oper­a­tion, with $95 bil­lion of assets, han­dles more of affil­i­at­ed deal­ers’ direct loans and leas­es in the U.S. than any oth­er automaker’s cap­tive lender, or whol­ly owned finance arm. Toy­ota also uses intense data sys­tems to keep buy­ers from stray­ing to GM or Ford.

“Our strat­e­gy is built around loy­al­ty and reten­tion,” said Mike Groff, chief exec­u­tive offi­cer of the Tor­rance, Cal­i­for­nia-based finance com­pa­ny. “We’ve deep­ened our use of data, and ana­lyt­ics of our data, to take bet­ter care of cus­tomers to encour­age them to go back to Toy­ota and to go back to the sell­er of the car that they have.”

Com­pe­ti­tion for U.S. mar­ket share has become more intense as Detroit offers its most com­pet­i­tive set of cars in a gen­er­a­tion. Toyota’s share of the mar­ket was unchanged through the year’s first nine months at 14.4 per­cent, short of its 17 per­cent peak in 2009. This week, Con­sumer Reports panned the company’s redesigned Lexus IS 250.

“Hav­ing an extreme­ly strong cap­tive part­ner opens up a range of pos­si­bil­i­ties that aren’t open to com­pa­nies with weak or no cap­tive,” Lar­ry Dominique [pres­i­dent of ALG Inc.] said. “Toy­ota can def­i­nite­ly be more aggres­sive on leas­ing.”




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