Monopolistic market division by Toyota!

[caliper]

I called up a Toyota dealer in a different city to get a price, and after finding out where I'm calling from, they actually said I should buy from my city's dealer. That was strange, since I knew the ownership of the two dealers isn't the same.

So I called another city, and the salesman also said that I should buy from the local dealer. I said that they used to sell to outside buyers, and he confirmed this (it was probably a slip of the tongue). He said that used to be the case, but now the company (Toyota) has divided up the territories in which each dealer can sell.

This is completely unfair on the part of Toyota. While there is more than one Maruti dealer in most cities, there is barely even one Toyota dealer per city. Even a big metro like Calcutta only has a single dealer. The only way a buyer had to get a good deal was to shop at different cities. Now they have blocked off even that approach.

This division of territores for sales is called market division, and it is illegal in Western countries. I can't believe Toyota is doing this openly here!

Here's what Wikipedia has to say about this:

Market division, in an antitrust or competition policy context, typically refers to an agreement amongst (horizontal) competitors to allocate or divide the market. Competitors will divide the market and sell exclusively in their pre-allocated region. Thus, consumers in a particular region do not benefit from competition and suppliers are free to act as monopolists within their allocated market because their competitors refuse to sell in those regions. Such types of agreements are illegal in the United States and in many other jurisdictions across the world.

Links:
http://en.wikipedia.org/wiki/Market_division
US Dept. of Justice regarding market division:
http://www.usdoj.gov/atr/public/guidelines/211578.htm

[androdev]

Even within the same city, toyota doesn't allow its dealers to compete against each other. Any significant discount has to be approved by the manufacturer itself and not the dealer. Same with Honda I guess. Dealers do not have a lot of freedom I think.

[GTO]

Legally, they cannot refuse you a sale. Unfortunately, they can do enough for you to walk out of a potential purchase.

[narayan]

is there really a big difference in prices across dealers in a single state ?

or across states - is it worth the effort ?

[BUSA]

is there really a big difference in prices across dealers in a single state ?

Single dealer = Monoply. So he wont be ready to give any discount as he knows if you wanna buy a Toyota he is the only one you can come to.

And about Toyota not giving discounts on dealership level is BS, my dealer was ready to give me Corolla H2 @ 10Lacs OTR

[caliper]

Originally Posted by narayan

is there really a big difference in prices across dealers in a single state ?

or across states - is it worth the effort ?

Brother, you have to look out for your own interest, because surely the dealer will not. The only way you could possibly negotiate price is to have an alternative. If there is no alternative, basically, you will have to place your wallet on the altar as a sacrifice and they can take whatever they desire. And you can't do a thing about it.

[1100D]

The other ways to work around this is to play the card of interested in a competitor product. But then, that would not help after you have purchased the vehicle and have to rely on the sole dealer workshop for your service needs.

[ajmat]

The issue is that they need to register the car for you. They cannot sell an unregistered car

[CrAzY dRiVeR]

Originally Posted by ajmat

The issue is that they need to register the car for you. They cannot sell an unregistered car

Not sure.

In kerala, we have two dealers (AFAIK), and one handles north kerala while the other handles the south.

There wont be registration issues with dealers in same state, right? But then also, there is no competition.

[ajmat]

Originally Posted by CrAzY dRiVeR

Not sure.

In kerala, we have two dealers (AFAIK), and one handles north kerala while the other handles the south.

There wont be registration issues with dealers in same state, right? But then also, there is no competition.

Well, if I live in Calicut and get a good deal in Trivandrum, who is going to drive the car to Calicut, establish a relationship with the RTO etc to get car registered.

Our problem is that the RTO is fragmented into territories and districts. most other countries, it goes to state level. One goes to any vehicle office (or the dealer does) and provide the details.

In the UK, the dealer is allocated some reg numbers, so all he does is fill the forms and sends out while you drive off. No going to RTO to register etc. If you want a particular number, you call the licencing authority to reserve the number and give paperwork to dealer.. Whopps, am far off topic

[caliper]

Originally Posted by ajmat

The issue is that they need to register the car for you. They cannot sell an unregistered car

You're correct that they can't sell a car without papers. But you don't need the permanent registration, just temporary registration. And that registration is normally just a piece of yellow paper with the temp number written in with a black marker pen (on a preprinted form).

The temp registration is for the jurisdiction where you bought your car. When you get to where you live, you would go to the local RTO just as if you had bought the car locally. (Or you'd go to your local agent just as if you had bought the car locally.)

Think about it this way: if you live in Haryana and bought a car in Karnal city, you could still visit Delhi on your temp registration, no? Similarly, when you buy a car in Delhi and live in Haryana, you'll just be driving around with a Delhi temp number for a week or two.

I'm just saying all this stuff so we, the consumers, have a fighting chance against monopolistic corporations.

[xinome]

seriously is the price difference that huge, that we can big discounts elsewhere! also i stay with ajmats point one should have a very good connetion with their local RTO, i do

Nippon toyota here in south Kerala - does good with customers in north kerala as well but dont know much about interstate!

[caliper]

Originally Posted by xinome

seriously is the price difference that huge, that we can big discounts elsewhere! also i stay with ajmats point one should have a very good connetion with their local RTO, i do

Nippon toyota here in south Kerala - does good with customers in north kerala as well but dont know much about interstate!

The point is not that necessarily that you would buy from another dealer. Rather it is that, by removing the very possibility of a second source, Toyota totally destroys your ability to bargain.

Normally, you can play off one dealer against another. But with market division, you are at the mercy of Toyota.

[Mr.Bangalore]

In bangalore we have 2 dealers Nandi and Ravindu, in fact Ravindu has 2 dealership one in Rajajinagar and other one in Victoria Road. i dont see any difference in price, but will get some difference in accessories i think..

[androdev]

Originally Posted by BUSA

Single dealer = Monoply. So he wont be ready to give any discount as he knows if you wanna buy a Toyota he is the only one you can come to.

And about Toyota not giving discounts on dealership level is BS, my dealer was ready to give me Corolla H2 @ 10Lacs OTR

I didn't say no dealership level discounts. But for better discounts, you have to deal with the manufacturer directly. And you can not play one dealer against the other - which is as good as monopoly.

Five of us wanted to buy Corolla at a good discount and it was a three-party negotiation (dealer, manufacturer and us.) Dealer wanted the business badly, but it was always the manufacturer that called the shots. And the other dealer refused our business saying Toyota won't allow them to do so unless we write to the manufacturer that we want to buy only from this dealer which means we can't negotiate with the 1st dealer. It is a long story, but bottom line is toyota dealers do not have a free hand. This is not the case with Maruti, Hyundai, HM, etc.

Your 10L OTR offer for H2 is very attractive. We were not getting H1 for that price in Bangalore. It also depends on the time of the year, how badly the manufacturer needs to meet the sales targets and so on. Also toyota is located in Bangalore so they are more intrusive here. One of the toyota dealerships is owned by Kirloskar (who is a partner of toyota kirloskar motors) so it gets even more complicated.

Toyota does not allow free and fair competition among the dealers. Period.