Section 5. Production and Sales Systems Reinforced
Item 3. Reinforcement of Sales Systems in Japan
In August 1971, President Richard Nixon of the United States announced a dollar-defense program, and the yen to dollar exchange rate jumped. At the same time, the United States imposed a 10 percent duty on imports, and the recessionary mood in Japan spread.
In response, Toyota adopted a nationwide dealer policy of reducing personnel in administrative departments to the absolute necessary minimum and transferring personnel from administrative departments to sales and after-sales service departments to transform dealers into lean organizations with no excess and provided support to dealers to reinforce structures.
Increasing the number of sales personnel was essential for reinforcing dealers. In May 1972, Toyota launched the Dealer Operations Department within the Vehicle Group to strengthen sales personnel recruiting by dealers and develop recruiting and hiring expertise. Toyota also put greater effort into increasing the number of sales sites. In order to encourage the creation of new sales sites by dealers, it was necessary to provide financing under favorable conditions, and in April 1973 Toyota began providing facility financing to dealers that requested financing.
As a result of dealer efforts and the support provided for recruiting activities and the establishment of new sales sites, Toyota's sales systems were significantly strengthened. The number of sales personnel increased from 24,700 at the end of September 1972 to 26,900 one year later, an increase of nearly 10 percent. The number of sales sites for new cars also rose, increasing from 2,251 at the end of September 1972 to 2,440 one year later and further to 2,594 the year after that. The ratio of personnel in administrative departments to sales and after-sales service departments increased from 48.7 percent at the end of September 1971 to 52.6 percent two years later.
Toyota began construction of a training center in Nisshin-cho (now Nisshin City) in Aichi-gun, Aichi Prefecture in April 1973. Sales training became increasingly active over the years since the foundation of a sales college in the Chubu Nippon Driver School in 1958. The Haruhi Training Center, which was relocated in 1961, enriched it manager training programs and expanded into parts and industrial vehicle fields, and as a result became increasingly crowded. With the completion of the new training center in October 1974, it became possible to conduct better sales training in a more favorable environment.
In early 1976, it was determined that the market was beginning to recover, and that spring a large-scale sales capacity expansion plan was drawn up and actively implemented. The plan included the following:
- 1.A 10 percent increase in sales personnel at dealers nationwide by mid-1977 to create a sales force of 30,000, and a further addition of 2,000 salespeople in 1978.
- 2.A 10 percent increase in nationwide dealers' new car sales sites by mid-1977 for a total of 3,000 sites.
At an executive meeting of the Toyota National Dealers' Advisory Council in May 1976, Toyota proposed to the dealers this two-year plan to increase sales capacity, and the plan was launched that June with the understanding of the dealers.
Under the plan, Toyota provided financing and other support to dealers that lacked capital according to their request. This was a second facility financing program following the financing program implemented in 1973. By offering favorable financing terms including a five-year repayment period deferrable for two years, a total of approximately 30 billion yen in financing was provided over the two years from July 1976 to the end of June 1978, greatly contributing to the expansion of sales bases.
It was not necessarily easy to recruit the large number of sales personnel called for under the plan. Toyota's Operations Department used help-wanted ads placed in newspapers in collaboration with dealers, sent direct mail to students, conducted discussions with Toyota dealer groups at universities in various regions, and provided other active support to dealers. Dealers' personnel officers implemented the plan with a priority on recruiting.
Through this process, the sales capacity of dealers was augmented and the number of sales personnel at Toyota dealers nationwide reached approximately 30,000 in June 1977 as planned. The number of new car sales sites increased to 2,962 at the end of September 1978, approaching the target of 3,000.