How does the Toyota dealer allocation system work?

My sales person said that my ordered vehicle isn't on this month's allocation list.

It's a little vague to me as to what is happening. Does Toyota batch process the vehicles that are ordered so that they will have a run of a specific model?

-- Ron

Reply to
Ron Peterson
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A through explanation would take days or weeks, so I'll give the cliff notes version I used to give to the dealers I called on.

Some terminology: A vehicle "series" is what consumers often refer to as a model, such as Camry, Corolla, Yaris, etc. A "model" is a specific body style (sedan, wagon, coupe), trim level (CE, LE, XLE, etc), engine, transmission, and drivetrain (FWD, AWD) within a series. For example, a Corolla S with an automatic transmission is a different model from a Corolla S with a manual transmission or a Corolla LE with an automatic. A sale is counted when retail delivery record (RDR) is submitted to the factory and the customer has taken delivery of the vehicle. "Travel rate" is the average number of cars a dealer sells per day over the most recent allocation sales period. I haven't checked in a long time, but when I was doing allocations, it was 120 days. "Days supply" is a measure of a vehicle inventory. If a dealer sold 120 cars over the past 120 days, his travel rate is 1.0 To calculate days supply, divide the number of vehicles in the inventory by the travel rate. If a dealer has 60 vehicles in inventory and in transit to the dealership from the port or rail yards and has a travel rate of 1.0, then the dealer's days supply is 60 days.

Cars and trucks are allocated separately but the allocation process is the same.

The vehicles are assembled at various plants and shipped to the distribution point in batches that are roughly 10 days supply for the sales region. Roughly every 10 days, the regional office will look at every dealer's days supply, compare it with the regional days supply with the new batch of vehicles added in, and then allocate vehicles to each dealer so that they all have roughly the same days supply.

After the overall number of vehicles for each dealer is calculated, the allocation is calculated at the series. Because of the huge number of model permutations, the district manager has some flexibility in allocating models within a series to try to fill dealer requests and preferences.

The dealer can than accept the allocation or turn down all or part of the allocation.

Reply to
Ray O

Ray does this work differently in the Southeast (because of the independent distributor). It seems like in the Southest you can get cars from any dealer in the district at any dealer in the district. Both of my Sisters recently purchased RAV4s. They shopped multiple dealers and bought from the one with the best price. For both of them, the actual car they purchase came from a another dealer, but was shown as being availabel in the "southeast." While we were waiting for the SOs RAV4 I talked to the salesman. He told me that the number of cars they were allocated was limited by their sales history. For "hot models" they only got so many becasue they were a smaller dealership. He gripped that this made it hard for them to become a bigger dealership since the existing bigger dealerships got more of the "hot" models. Of course right now, I don't think there are any "hot" models, so I suppose now is the time to build your sales history.

I still want to send an "I told you so" letter to the new Toyota CEO. He should fire everyone that had anything to do with the Tundra debacle. What a waste. Billions to build crap - even GM wasn't that stupid. I just bought a new pick-up. It was hilarious to watch the Toyota salesman try to sell one of those pigs. The new F150 is soo much better.

Ed

Reply to
C. E. White

I ordered the HH, which is made in Japan.

I was thinking that there might be some limitation on the production of hybrid models because of battery shortages. I wouldn't think that the factories themselves are running at full capacity.

-- Ron

Reply to
Ron Peterson

Do Toyota factories mix vehicles of different series in their production line?

Or, does each factory specialize in one series?

Or, can a factory change the series that they are producing.

That's a nice conservative approach to counting sales.

Is the dealer paying for the vehicles when they reach his lot? Or, do the vehicles still belong to Toyota?

Are the Highlander and Sienna considered trucks by Toyota?

Does the dealer have any control over the configurations of the models that the district manager allocates?

-- Ron

Reply to
Ron Peterson

As far as I know, the basic formula for Southeast Toyota is the same as the rest of the U.S.

There are a few twists that I didn't mention previously. Dealers can trade vehicles allocated to them with other dealers pretty much any time after the vehicles have been assigned. If they do the trade early enough in the process, the traded vehicles will be shipped directly to the receiving dealer with the correct Monroney label (window sticker) and invoice. If the vehicle has already been processed for a particular dealership, then the dealers have to physically trade the vehicles between locations.

The gripe about small dealers staying small is one I used to hear all the time from small dealers. Small dealers tend to stay small because they don't listen to Toyota and their district managers and learn how to work the allocation system. The allocation system is based on sales velocity, not purely sales volume. Sales managers should know that allocation schedule for their region, and so the trick to earning more cars is to sell what they have in inventory before the next allocation instead of holding out for whoever will pay the most money.

You will have to send your "I told you so" letter to a new CEO come June. The current CEO will become vice chairman, essentially a ceremonial post. My read on the situation is that the move is due to relatively poor Corolla sales and the Tundra push. Toyota generally is very conservative in its management style, and the big push to sell the Tundra and open another Tundra plant in Texas was very uncharacteristic of them. The current CEO had a stated goal of reaching new levels of profit, and he saw full size trucks as one of the means of achieving that goal. I've met the incoming CEO and his father. Both are incredibly intelligent and savvy, and I'd say that Toyota will be back in the black in less than two years.

I disagree that the Tundra is crap, but Toyota is still on the full-size pickup learning curve, with this generation only being Toyota's 3rd generation big truck. Toyota probably would have been better off using its resources to solidify its position in its bread and butter market than try to leap-frog the more established competitors in one fell swoop. The Detroit 3 have the advantage of a very healthy head start in pickup development, and it shows in how well thought-out the current generation of trucks is. I was just at the Chicago Auto Show, and I'd have to agree that the F150 is probably the class leader. The Chevy/GMC received poor crash ratings recently, which is surprising for a full sized truck. The "new" Dodge Ram didn't impress me as it seemed more about size and brute horsepower than about a well thought out design.

Reply to
Ray O

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