Toyota Considers Online Brand Launch

Toyota Motor Corp. is mulling over the idea of using the Internet as a cornerstone of a launch

effort behind its new vehicle line, spokespeople told internetnews.com on Wednesday.

The Japanese automaker’s U.S. unit said that the company is considering ways to promote a third

brand of automobiles, which would complement its existing Toyota and Lexus lines. The new brand

is expected to be tailored for young buyers. As a result, Toyota is looking closely at the

Internet to market and sell the vehicles.

If Toyota chooses to bet heavily on the Internet, it would become one of only a very small

group of automakers that have trusted vehicle launches in large part to the Internet. Volvo, for

one, tapped the Web for the initial consumer advertising behind its S60 sedan last year. Earlier

this month, the Swedish automobile manufacturer also struck a multi-million dollar ad deal with

Microsoft-owned MSN, in conjunction with the debut of its first SUV.

In 2000, Ford Motor Co. used the Internet heavily in marketing its Ford Focus,

while Volkswagen sold two colors of its New Beetle exclusively on the Internet.

Still, Toyota wouldn’t necessarily have to look to competitors for tips. Earlier this year,

the company began promoting and handling much of the sales process online for its Prius hybrid

vehicle. And while the Prius was (and remains) a niche interest — appealing to early adopters

and eco-friendly consumers — Toyota says it has been impressed with the success of its online

sales process, which generated a three-month waiting list for the car.

“We are looking very intently on the possibility of doing a third brand,” said Toyota U.S.

spokesman John Hanson. “We know that we need to create products and a purchase process that is

much more attractive to buyers than the current system, and one of the things that we are looking

at is the success we’ve had with the Prius … which is a high-tech vehicle and appeals to people

that spend a lot of time online.”

As with Volvo’s effort for the S60, the Prius’ marketing aims to direct buyers from the

Internet into real-world showrooms. The vehicle is promoted via the Toyota Web site and virally

across the Internet, with Toyota’s site directing consumers to where they can test-drive or

purchase a Prius. The site also maintains the vehicle’s waiting list.

“The sales process behind this model has been very effective and very useful,” Hanson said,

adding that the third brand “may well integrate something like that.”

But Hanson dismissed reports that the company has already made up its mind on the process and

is launching its new brand entirely using the Internet. Discussions are still ongoing, he said,

and the company isn’t planning to release any announcements until mid-2002.

Still, he added that the company has long recognized that it needs to reach out to younger

buyers — launching a specialized product marketing group in 1999 to do just that. (The unit,

dubbed “genesis,” saw its earliest efforts result in the Toyota ECHO in early 2000.)

And, Hanson added, Toyota recognizes the Internet’s importance to young automotive consumers.

“We feel strongly that this is an important part of our future growth, and to really target and

appeal to young buyers, we’re going to have to create something very different,” he said. “Not

just the product, but the manner by which they purchase the vehicle has to be different. [Young

buyers] have different priorities.”

The news of Toyota’s plans come the same week as a new study by Web researcher Jupiter Media

Metrix that suggests the Internet is more valuable for automakers’ research

and consumer relationships than offline procedures.

According to the group, 60 percent of domestic vehicle-owning households are online — three

percent more than the overall national average. The firm also reported that Internet-generated

sales are expected to reach 13 percent during 2001. During the next five years, that figure is

expected to grow to 33 percent.

“The Internet is becoming an integrated component of the consumers’ car buying process by

facilitating the gathering of pre-sale information,” said Jupiter analyst Julie Ask. “The ability

to research automobiles on scores of Web sites has created an educated customer base armed with

information once held by … dealers.”

According to Ask, vehicle manufacturers and sellers will have to focus on consumer

responsiveness, openness and service to make the sale in the future. Indeed, Jupiter’s study

found that consumers who turn to the Web before purchasing a car are looking to reduce the time

they spend talking to dealers.

Jupiter also concluded that by 2006, more than 76 percent of vehicle-owners will be online.

Consequently, Ask said that automakers will have to perceive the Internet as a lifetime consumer

relationship channel.

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