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On 11 March 2020, the World Health Organisation declared the COVID-19 virus a pandemic, and at midnight on 25 March 2020, New Zealand went into nationwide lockdown.
TNZ established a four-phase recovery framework to manage the impacts:
This case study describes our immediate response to the first lockdown.
Within three days of the announcement to move New Zealand into full lockdown, our workforce was set up at home and working remotely. Departments were instructed to develop recovery plans with the objective of their emerging stronger and more sustainable.
Our parts warehouse remained operational to support the vehicle servicing of essential workers. Shifts were introduced to enable social distancing and safe working practices.
Due to the significant drop in revenue during the lockdown period, we received the first Government Wage Subsidy for employees. Given the loss of sales and continued uncertainty about the local economy and future trading, we will assess whether to return this in the first quarter of 2021 when we have a comprehensive assessment of the fiscal impact to our business.
The annual management bonus for FY2019 was cancelled, and employees were encouraged to reduce their holiday and sick leave liabilities.
New and used vehicles
We started 2020 with the best first quarter since launching the Drive Happy Project, and had almost three months of presales at the start of the lockdown. Under COVID-19’s Alert Level 4, sales of new vehicles fell significantly compared to the same months in 2019: by 38% in March and 90% in April. In May, as we transitioned to Alert Levels 3 and 2, new vehicle sales were down 32%. National car distribution returned to normal levels of functionality in Level 3 with no delays.
Vehicle sales will be affected by the lack of international tourists visiting New Zealand. We contacted rental vehicle customers to identify alternative business models to maximise the use and value of the vehicles. In some instances fleet customers deferred, rather than cancelled, their new vehicle purchases.
Parts and servicing
COVID-19 immediately affected our supply chain, with the availability of some parts (such as oil filters) manufactured in China quickly restricted. Our early response was to carry extra stock where possible, and work with customers to manage delays.
To support essential workers, servicing continued on a limited basis through the lockdown, which provided work for both Store service centres and TNZ’s parts warehouse. The lighter workload at some servicing centres provided an opportunity to address recalls.
We assured customers that warranties and service plans would be unaffected by COVID-19-related delays.
Stores closed under Alert Level 4, but service centres were able to operate on a limited basis, to support essential service workers’ vehicles.
Contactless services commenced under Alert Level 3, together with new, strict health and safety systems. TNZ provided a free kit of signage and standards at each alert level to guide customers to visit safely. Stores’ health and safety plans were updated, and approved by TNZ prior to their re-opening.
TNZ provided a communication strategy to help Stores re-engage with customers and remind them of their Toyota Care warrant-of-fitness and servicing needs.
All Stores survived the initial stages of the COVID-19 crisis, although there may still be difficult times ahead. In the national network approximately 1% of staff were made redundancies as of June 2020, and some staff took salary reductions.
TNZ’s senior management held weekly meetings to keep Stores up to date with local and global developments, enabling them to focus their full attention on their businesses. We offered Stores payment options to help their cashflow and deferred some account payments, spreading them over three months. We provided targeted concessions of $3.2 million and paid money from the Network Development Fund directly to the dealers as cash making $1.8 million available.
Supporting the wider community
Toyota has worked to support communities and small businesses hard hit by the pandemic.
TNZ and Lexus customers raised $125,000 in support of the Malaghan Institute of Medical Research through the donation of a portion of vehicle sales.
In June 2020 we launched a campaign offering the use of a Toyota Highlander SUV for 12 months to 100 small businesses (that employed fewer than 20 people and had received the Government’s Wage Subsidy). MediaWorks supported the initiative by providing radio advertising for those businesses to a total value of $1 million.
Online customer communications were enhanced with the introduction of a live ‘Chat with an Expert’ option here. This will be expanded, as industry trends show its increasing use by phone and email.
We also worked with partners to create positive customer experiences during the lockdown. These included:
We established a range of fun and informative ways to engage with and support employees:
Departments also worked hard to keep engaged and in good spirits. For example, the Customer Dialogue Centre set up themed team meetings, daily quizzes, and dressing-up competitions with themes such as ‘favourite sports teams’, ‘mad hair’, ‘80s’ and ‘90s’ and ‘Kiwiana’.
In FY2021 we will focus on maximising organisational efficiencies and strengthening core operations to become leaner and more sustainable and resilient.