Section 5. Expansion of Sales Systems in Japan and Development of Markets in Other Countries
Item 1. Publica Dealerships (now Toyota Corolla Dealerships) Start Operations
Before it sold the first-generation Publica, Toyota adopted a policy of establishing a new sales channel just for the Publica, separate from its existing dealership channel, in order to establish a mass sales system for the model. Preparations began in the autumn of 1960.
The Publica was a full-fledged car for the masses, and achieving high sales volumes would require the establishment of dealerships in all regions. Toyota believed that an American-style dealership system that allowed for free competition among a large number of small dealers would be effective for achieving this and would be desirable for consumers. The Publica dealership establishment and operation policies adopted were as follows:
- 1.Local capital and personnel will be gathered.
- 2.The number of dealerships will be as high as possible and the scale kept small.
- 3.Multiple dealerships will be established in the large prefectures and a complete system of multiple dealerships selling the same vehicle series in the same region (same prefecture) will be adopted (the 'open territory' system).
- 4.Wholesale distribution will be on a cash-on-delivery basis.1
There were many entrepreneurs in major cities who were interested in selling mass-market cars, and establishment of Publica dealerships proceeded relatively smoothly. The establishment of dealerships in rural prefectures, however, did not always proceed as anticipated. As a result, when the Publica was launched at the end of June 1961, a total of 22 dealerships had been established: seven in Tokyo, five in Osaka, three in Aichi, two in Kanagawa, and one each in Kyoto, Kobe, Shizuoka, Hiroshima, and Kitakyushu. Also, nine Diesel dealerships decided to handle the Publica. All of these dealerships opened at the same time in June 1961. By June 1962, one year after the launch of the Publica, dealerships had been established in major regions, and the number of dealerships increased to 52.
Sales of the Publica, however, were slower than expected and did not achieve the targets of 3,000 units a month at the beginning of sales and 10,000 units a month in the near future. Sales failed to grow even at the start of the following year, barely exceeding 2,000 units in April and May, and monthly average sales for that year remained low at 1,600 units. Even though Toyota attempted to create an ideal sales network for a car designed for the general public, the cause of the sluggish sales was the failure to observe the gap between the ideal and actual market conditions.
Toyota subsequently modified its initial policies concerning the establishment and operation of Publica dealerships. In February 1962, Toyota established the directly managed Publica Asahi (now Toyota Tokyo Corolla Co., Ltd.) in Tokyo. The establishment of this large, directly‐operated dealership meant a change in the small-scale dealership format. In March of that year, the cash-on-delivery policy was loosened, and cash-on-delivery sales were gradually reduced and eventually a bill-of-exchange model was adopted.
The timing was too early for a system of multiple dealerships selling the same vehicle series in the same sales region (the 'open territory' system). At that time in Japan, most sales were conducted by visits to the customer, and although efforts were put into sales under the open territory system, this led to an intensification of market competition and had a detrimental effect on the operation of dealerships.
Later, preparations were made for the launch of the first-generation Corolla. In order to reinforce the network for sales of mass-market cars by the time of the Corolla launch, the gradually growing number of Publica dealerships was increased by 18 over the six months from April to October 1966, bringing the total to 86. The Corolla was simultaneously launched at the 86 nationwide Publica dealerships and two Diesel dealerships on November 5, 1966. A cumulative total of 1.3 million people came to dealer announcement events, opening the curtain on a new era of full-scale personal automobile ownership.
The Corolla sold by the Publica dealerships became a bestseller in the mass market. In 1969, Publica dealerships changed their name to Toyota Corolla dealerships.