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Moves to reshape business model outlined in Toyota New Zealand’s 2019 Sustainability Report

Moves-to-reshape-business-model-outlined-in-Toyota-New-Zealand’s-2019-Sustainability-Report_HERO_940x450

In order to build its resilience to challenging economic conditions, Toyota New Zealand is focused on making better data-driven business decisions, improving customer retention and growing its hybrid electric range of new and used vehicles.

In its 2019 Sustainability Report Toyota New Zealand detailed its transition to a new business model, designed to support the commercial success and long-term viability of Toyota and its network of retailers. The new business model follows on from the successful Drive Happy Project, launched in 2018, which incorporated several customer-focused initiatives.

In the year to the end of December 2018, Toyota sold 33,068 new vehicles and 10,402 used vehicles. Despite a softer market in 2019 for new vehicles, Toyota expected to maintain its consecutive 31-year New Zealand market leadership with a 20% market share in 2019.

For the 2019 Sustainability Report, Toyota revised its materiality assessment, which gathers and ranks the issues that are of interest and concern to its internal and external stakeholders.  The top three issues were: Vehicle and parts environmental impacts over life; economic prosperity of Toyota’s ecosystem; and vehicle and parts safety, reliability.

Vehicle and parts environmental impacts over life was rated as the highest material issue by Toyota’s local stakeholders.

Toyota New Zealand Chief Executive Alistair Davis says Toyota has set ambitious goals for reducing the life cycle impacts of its vehicle and parts.

“We believe we have an important role, as a brand representing a quarter of all cars on New Zealand roads, in reducing negative impacts such as carbon emissions and road accidents and transitioning to more sustainable personal transport.

“We are increasing the availability of low-carbon vehicles and have set targets for reduced tailpipe emissions in the vehicles we import. We are also working hard to reduce our operational impacts including freight emissions from transporting vehicles and parts,” he says.

Toyota New Zealand is targeting hybrid electric to be 30% of its total Toyota and Lexus sales by the end of 2020. At the end of 2018 the proportion was 6.7% and by the end of 2019 it is expected to be 17%, achieved largely through the sale of hybrid electric RAV4 and Corolla models. In 2018, 30% of used cars imported by Toyota were hybrid; it is targeting 40% hybrid imports for 2019.

The average carbon emissions for new vehicles sold by Toyota New Zealand and its retail network has reduced by 8.9% (Toyota brand) and 21.9% for Lexus since 2010. Toyota has a 2030 target of tailpipe emissions of new Toyota vehicles sold of 152 gCO2/km. At the end of 2018 it was 182.3 gCO2/km.

Mr Davis says hydrogen will also play an important role in New Zealand’s energy mix as the country is well placed to produce hydrogen using renewable energy. Toyota has an internal working group exploring commercial opportunities and barriers to the introduction of hydrogen vehicles and infrastructure in New Zealand.

The 2019 Sustainability Report’s material issues included not only the economic prosperity of Toyota New Zealand but also that of the business it works with – the franchised retail network in 60 communities. Toyota is also a key customer for logistics providers and local parts manufacturers.

Due to market challenges and the transition to the Drive Happy Project business model, Toyota New Zealand made a financial loss of $3.7 million on revenue of $1.362 billion during the financial year to the 31st March 2019. However, the retail network of franchised businesses recorded its third-highest profit on record, as the financial impact of changed business model was greater for Toyota New Zealand than the retail businesses.

Vehicle and parts safety and reliability was another important material issue to both internal and external stakeholders, including customers, employees and suppliers.

Toyota Motor Corporation (TMC) is dedicated to the safety of vehicles through their design and manufacture. TMC continues to evolve its Toyota Safety Sense technology, which has active safety features targeting common causes of traffic accidents.

Toyota is committed to fix the parts of any vehicle affected by a recall at no cost. The 2015 recall of faulty airbags manufactured by Takata continued through 2018 and 2019. In response to the scale of the recall, Toyota New Zealand employed extra staff to help resolve the issue. To date, 76% of Takata airbags in affected Toyota vehicles have been replaced.

TMC has six global Environmental Challenge 2050 goals: reduce vehicle CO2 emissions by 90%, eliminate CO2 from material and vehicle production, minimise the use of water in manufacturing, create a recycling-based society and partner with others to conserve natural habitats.

As an importer, distributor and marketer, Toyota New Zealand supports these goals by sourcing vehicles with increasingly lower emissions, encouraging car battery recycling and partnering with organisations such as the Department of Conservation on the Toyota Kiwi Guardians programme. More than 46,000 kiwi kids were involved in Toyota Kiwi Guardians in 2018 and the 50,000th Kiwi Guardians activity medal was awarded in 2019.

After nine years of progressively working on environmental initiatives, all 64 Toyota and Lexus dealerships around New Zealand have achieved Toitū enviromark Diamond certification, says the Sustainability Report.

Toitū enviromark Diamond certified organisations have a robust environmental management system (EMS) in place to identify significant impacts, develop internal plans to prevent or reduce those impacts, and find opportunities for improvement.  The Diamond level exceeds the requirements of ISO 14001, one of the world’s most recognised environmental standards.

The move to achieve Toitū enviromark Diamond certification is aligned with Toyota’s sustainability strategy and its commitment to the Toyota Environmental Challenge 2050 goals.

As Toyota New Zealand is a wholly-owned subsidiary of TMC, the Toyota New Zealand 2019 Sustainability Report provides a valuable comprehensive report on a wide range of its local operations, business initiatives and environmental, social and governance (ESG) performance.

The report was prepared in accordance with the Global Reporting Initiative Sustainability Reporting Standards: Core Option and was externally assured by KPMG.