Toyota’s decision to consolidate its UK direct marketing for both the Lexus and Toyota marques into Kitcatt Nohr represents a shift in thinking by the world’s leading car maker, at a time when the automotive industry is being forced to rethink itself on every level (MW.co.uk January 29).
While a consolidation would, on the face of it, seem like a sensible cost-cutting measure, industry observers warn that the move is not without its risks.
Marc Nohr, managing partner at Kitcatt Nohr, says working on both brands will enable shared working practices. The agency has been tasked with “cultivating leads” for customer acquisition and retention across both brands.
“Working with the two sister companies will allow us to bring synergies to bear in terms of shared strategic and tactical marketing initiatives and shared working practices,” says Nohr.
The agency already has experience of handling sister, yet distinct, brands with its work on John Lewis and Waitrose, both owned by the John Lewis Partnership.
Nohr says of Toyota: “We will have hybrid teams working across both marques, introducing efficiency to the brands and playing to their strengths. The eyes of the industry will be on us from April to see if the collaboration works.”
The Japanese carmaker called a review of its UK direct marketing account for the Toyota brand alone in July (MW July 8, 2008). However, the review was halted in December while Toyota conducted a “strategic review of its business needs” as it sought to streamline itself and cut costs (MW December 4, 2008).
Last month, the company served notice on Glasgow-based agency GRP that it would cease working with them for used car, commercial vehicles and field staff dealership marketing in April due to “a wider agency consolidation exercise across Toyota and Lexus brands in the UK”.
While Kitcatt Nohr and Toyota are predictably confident the consolidation is a wise move, motoring experts are far from convinced.
Global Insight automotive analyst Charles Clowdis says: “Combining the two marques seems to be a dramatic turnaround for the company, effectively trying to put the idea out there that Lexus is as good as Toyota at providing cars that people want, cars that are more than just a mode of transport. It could be a huge ask.”
Despite Toyota overtaking General Motors as the world’s leading car manufacturer last month, it is far from immune from the catastrophic decline of the industry.
Toyota Motor Corporation warns that it is likely to post an operating loss of ¥150bn (£1.16bn) in the year to the end of March, its first loss since it began reporting figures in 1941.
In the UK, Lexus has a 0.47% market share, having sold just 10,122 cars in 2008, while Toyota has a 4.96% market share and sold 105, 717 cars last year, according to the Society of Motor Manufacturers and Traders.
Kitcatt Nohr faces the challenge of increasing these numbers, as car sales continue to plummet, bail-outs abound and Toyota’s competitors take drastic action. Honda UK has laid off 3,000 workers for four months at its Swindon plant.
Motoring expert Matthew Pringle comments: “Toyota is burning itself with its own flame. We are facing the worst conditions the motoring industry has seen in a while, and Kitcatt Nohr will face a huge mountain to overcome. Lexus is dying in the UK and Toyota must emphasise its high-end technology to win the ongoing battle of attracting new customers.”