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Like Honda, Toyota to Ban Below Invoice Advertising

August 23, 2015 — Like Honda, Toyota to Ban Below Invoice Advertising

Confirming what we’ve been hearing for several weeks now, Automotive News is reporting that Toyota will inform its dealers next month that it will begin to prohibit its dealers from advertising below invoice pricing for its vehicles. The move, which is expected to begin in January follows a similar play by Honda a few years ago.

Honda dealers who are repeat offenders can lose hundreds of dollars per vehicle in marketing assistance. Toyota is expected to enact similar penalties for its dealers.

For Honda, not allowing its dealers to advertise below invoice pricing, is about protecting the brand image and the long term residual values of its vehicles — which are some of the highest in the industry. It also helps its dealers maintain profitability in the sale.

Numerous Toyota dealers have asked for Toyota for a policy that is enforced — mainly because of other Toyota dealers who aggressively advertise below invoice. The real problem may not be those Toyota dealers, however, but Nissan, which has attacked the market with aggressive incentives and sales strategies as it tries to meet Carlos Ghosn’s mandate of 10% market share in the U.S.

Toyota’s move, as does Honda’s, includes what vehicles are listed for on third-party sites such as Edmunds.com, CarGurus and TrueCar. It will be interesting to see how Toyota’s strategy affects those three companies specifically, whose business models rely more on informing car buyers what various vehicles are selling for in the local market.

Several dealers believe Toyota’s move will eliminate the need for the brand’s dealers to be on those sites.

 

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