Manufacturer refurbished Toyota's

[Shahpor]

Hi all,

Came across this today:

https://jalopnik.com/toyota-wants-to-make-its-cars-last-longer-by-refurbishi-1848338977

Whilst it sounds good in theory, I can't help but think that Toyota is basically taking a lot of good value used cars off the market and making a profit on them twice.

[Linas.P]

You sound a bit pessimistic here friend... 

The idea is sound in theory, refurbishing cars is way better than making new ones and way better for environment than crazy EV agenda which is currently being pushed. Anything that extends car lifecycle and reduces the number of new cars sold is generally good. This seems bright idea and opposite of planned obsolescence which in my view should be illegal.

My RC was in exactly such situation - lease return after just over 2 years and it kind of needed "refurbishing", new driver seat would have been nice, mud flaps were kind of shot and as it turned out all brake disks and pads were worn out. Something that dealership was not willing to replace when selling used car, despite branding it as "used approved", but probably something "refurbishment" programme would replace. So potentially we can just look at this as more thorough approval process for used cars if not for rebranding of the cars. 

However, I see your point - I take particular issue with definition of "lifecycle". If they say they would "refurbish" 8-12 years old cars, then this would be amazing idea. Sort of at the end of the warranty period and give it another 5 years warranty. That said proposed "refurbishing" time after 3 years doesn't make sense and sounds a lot like what you said - taking perfectly good cars off the market to throw unnecessary parts at them and try to profit from the car again. What could be wrong with 3 years old Toyota that needed "refurbishing", that is basically nearly new cars with say 30-40k miles on it. That said cars usually looses majority of their value in 3 years if sold as used, but if sold as new/refurbished on different brand name, then they probably will command similar price as new lower end car. 

So sadly I have to agree with you - seems like Toyota wants to profit twice from the same car. In short I don't know your reasoning, but I agree with your conclusion.

[m4rkw]

There's nothing in that article that suggests this is anything more than the "approved used" bull**** that goes on in nearly every used car salesyard in the country.

Toyota will hoover the carpets, upgrade the software, throw some new tyres on it and then sell it at a premium because it's "manufacturer refurbished". I can't imagine they're going to replace anything they don't need to. Ex-leases will normally be in reasonably good shape already as they're required to be serviced and nobody wants to get stung when they return it.

What this article really seems to be saying is "wow, this country elected Boris Johnson as their leader. they'll literally buy anything. party time!"

[Linas.P]

28 minutes ago, m4rkw said:

There's nothing in that article that suggests this is anything more than the "approved used" bull**** that goes on in nearly every used car salesyard in the country.

Toyota will hoover the carpets, upgrade the software, throw some new tyres on it and then sell it at a premium because it's "manufacturer refurbished". I can't imagine they're going to replace anything they don't need to. Ex-leases will normally be in reasonably good shape already as they're required to be serviced and nobody wants to get stung when they return it.

What this article really seems to be saying is "wow, this country elected Boris Johnson as their leader. they'll literally buy anything. party time!"

Kind of true if not for two things:

1. used cars sales are unbelievably low margin, so any used cars yard and even Lexus used "approved" cars are being sold in substandard condition already, because no salesperson wants to put any money in it. Be that anecdotal evidence, but there were multiple treads on how substandard are "used approved" Lexus cars, including my own experience - so imagine how poor are third party dealership cars. 
2. they are proposing rebranding cars under different brand, that is quite a big leap from just "used approved", so they really want them to be viewed as remanufactured/refurbished to nearly new standard.

[Shahpor]

24 minutes ago, m4rkw said:

There's nothing in that article that suggests this is anything more than the "approved used" bull**** that goes on in nearly every used car salesyard in the country.

Toyota will hoover the carpets, upgrade the software, throw some new tyres on it and then sell it at a premium because it's "manufacturer refurbished". I can't imagine they're going to replace anything they don't need to. Ex-leases will normally be in reasonably good shape already as they're required to be serviced and nobody wants to get stung when they return it.

What this article really seems to be saying is "wow, this country elected Boris Johnson as their leader. they'll literally buy anything. party time!"

Linas has it right, this is more than just approved used.  What I am curious about is where it will include all the cosmetics as well such as damage to bodywork or trim.  By the sounds of it, they will be aiming for something that resembles 'lightly used'.

Also, from the Autocar article, it seems that the refurbed cars will only be available via certain scheme and will be rebranded, such as:

Kinto will be an umbrella brand for a range of services, which will be introduced in selected cities and markets. They include Kinto One, a full-service leasing system that will merge vehicle, service and insurance costs into a single monthly payment. Kinto Flex will offer subscription-based car leasing with a ‘premium experience’.

So, effective, what they are doing is removing a lot of used cars from the market that could have been bought outright and converting them to leased for another 3 year cycle.  This would then be followed by another cycle meaning that they wouldn't be removed from the leasing plan until they are quite old.

[Las Palmas]

It is a way to keep selling cars, when they cannot get the computer parts etc. to make new cars. Old spare parts are in stock already so Toyota can make good profit selling that kind of "new" cars by getting rid of used cars and not sold spare parts.

[m4rkw]

Makes sense. I wouldn't buy a 3yo car anyway though so probably not going to make any difference to me. Will be interesting to see what they actually do in their refurbishment process and what the value of these cars ends up being after they've been recycled a few times.

[Mr Vlad]

Cazoo, Carwow, Cinch.

And another car selling company comes along But specialising in one brand of car.

Oh dear. How laughable at Toyota and how to lose respect in a company. 

 

[Linas.P]

1 hour ago, m4rkw said:

Makes sense. I wouldn't buy a 3yo car anyway though so probably not going to make any difference to me. Will be interesting to see what they actually do in their refurbishment process and what the value of these cars ends up being after they've been recycled a few times.

It may impact you. This will cause similar effect as chip shortage during pandemic. Basically car ownership has cycles - first is brand new cars that are leased for ~3 years. After that car has depreciated like 50% making in affordable for next part of the society to own it at huge discount, sometimes they are bought outright, sometimes leased, then there is tertiary market after ~8 years, when cars depreciates like 80-90% and being sold by third part of society which would not be able to afford (or simply not willing to pay the money) cars in previous 2 cycles.

Now if you remove the first cycle, and then the second cycle, the supply overall is going to become lower, which will significantly increase values of used cars, even the 10 year old ones. There may be delay, but the point is - for every year where there are less cars sold, the supply will be lower down the line and likewise the depreciation will be lower. Just look at what is happening in the market now, used car prices are increasing, which was never the case before. I bought 2008 120k miles IS250 in 2014 for £3950, the same cars still sells for similar price now in 2022 - the difference is that when I bought it, the car was 6 years old, now it would be 14 years old yet costing the same even after considering inflation (~£4522 in todays money).

I guess the difference - pandemic impacted all makes across the globe, this Toyota plan only impact Toyota brand and it may not have such profound effect if other makes won't follow the suit.

Is that really bad thing? I don't know... less depreciation means that people maybe going to keep cars for longer and care for them better. One thing is to regularly service the car when it is still worth £10k, and another is to do the same when it is worth £1200... at some point it just becomes not economically viable to maintain it. Keeping depreciation lower may reduce demand to upgrade as often, which in grand scheme of things maybe a good thing - less consumption = less pollution. 

[dutchie01]

I think it makes sense from Toyotas point of view. There will be a market for this scheme. Please realise the cheapest cars are disappearing from the market due to CO2 regulations. The Toyota Aygo/Citroen C1/Peugeot whatever that literally sold in the hundreds of thousands are gone and will not be replaced. Transport for the masses so with what could we possibly replace it with? Those customers are prepared to pay 5/8k for a reliable car with minimum costs but will never buy a 10 yr old car without warranty as a possible breakdown will destroy their savings. Enter the Toyota scheme. A refurbished 9 yr old toyota with 3 yrs warranty for 5k !

 

[ColinBarber]

If they want to make old Toyota/Lexus vehicles more valuable they should replace the infotainment systems with something more modern that younger owner will want. Sadly the chip shortages that are forcing them to look at this refurb programme would also prevent that approach.

[Linas.P]

2 hours ago, dutchie01 said:

 A refurbished 9 yr old toyota with 3 yrs warranty for 5k !

That would be great, but sadly this is not what this scheme is about, at least according to this article.

I am wondering whenever they take the cars from developed market like EU and then sell it refurbished in developing markets - say South Asia. Because otherwise I foresee some issue related with homologation and taxation of such cars.

[Shahpor]

3 hours ago, dutchie01 said:

I think it makes sense from Toyotas point of view. There will be a market for this scheme. Please realise the cheapest cars are disappearing from the market due to CO2 regulations. The Toyota Aygo/Citroen C1/Peugeot whatever that literally sold in the hundreds of thousands are gone and will not be replaced. Transport for the masses so with what could we possibly replace it with? Those customers are prepared to pay 5/8k for a reliable car with minimum costs but will never buy a 10 yr old car without warranty as a possible breakdown will destroy their savings. Enter the Toyota scheme. A refurbished 9 yr old toyota with 3 yrs warranty for 5k !

 

That is a nice idea, but what if it is a £10k car with only a 1 year warranty?  The point I am trying to make is that if this becomes widespread then the dealers will get a lot more say on used car values and their associated mark-up.  After all, they will say that it was 'refurbed' only 3 years ago, so it should attract a premium for all the extra work the manufacturer has put into its maintenance.

Of course, the argument that arises is that they could be right and the car could be in very good condition for its age, but there will be some sort of premium attached which won't be optional, hence less choice of used cars at the lower end of the price range.

[dutchie01]

Something drawing my attention.

1. After the first 3 yr cycle they will take the cars back to the factory. Where are the dealers in this story? will it be an internet only operation without dealers?

2. After the third cycle ( 9 - 10 yrs) they will recycle the car at the factory and re-use parts where possible. So after 10yrs they take the car out of the market? 10 years is nothing just go for a drive and you will see plenty of cars 15/20/25 yrs old.

[Malc]

1 hour ago, dutchie01 said:

10 years is nothing just go for a drive and you will see plenty of cars 15/20/25 yrs old.

and EVs in most parts of the world just well, won't be there .........  you won't be able to re-charge across the Gobi or up the Andes or much of the Rrift .......  if you get my drift !

Malc

[Shahpor]

2 hours ago, dutchie01 said:

Something drawing my attention.

1. After the first 3 yr cycle they will take the cars back to the factory. Where are the dealers in this story? will it be an internet only operation without dealers?

2. After the third cycle ( 9 - 10 yrs) they will recycle the car at the factory and re-use parts where possible. So after 10yrs they take the car out of the market? 10 years is nothing just go for a drive and you will see plenty of cars 15/20/25 yrs old.

These are good points.

Since it is only for leasing, and available exclusively through this Kinto brand, it is possible that it will be Internet only.  From what I understand, a lot of leasing deals work this way already?  Not sure you would do if you want to actually try the car before agreeing to the lease though.

As for your second point, if the cars are forcibly recycled at the end then I agree that it would take quite a few viable used cars out of the market.

Basically, if this idea catches on with our manufacturers, then the business model would be shifting to a pay-as-you-go one where cars become a service item rather an something you own, which doesn't look like a good prospect if you don't want a monthly payment.

[dutchie01]

Exactly that is what polestar, lynk & co and volvo are doing

its called subscription!

[Linas.P]

1 hour ago, dutchie01 said:

Exactly that is what polestar, lynk & co and volvo are doing

its called subscription!

Not only Volvo - this idea was around for at least decade and there are still not a single working manufacturer backed scheme. At very least I know PSA, Lexus, BMW, MB, VW Group were all considering such schemes. And unless law would change in some dystopian way prohibiting private ownership of the car I can't see this ever working (for reasons not related to this thread).