Rejecting EVs as a silver bullet, Toyota takes an inside line with the speedy acquisition of a ride share business and big Ezi Car Rentals firm.
NZ's biggest vehicle retailer is criticising Labour and the Greens for climate policies that it says don't work, and that demonise car companies.
The company that gave New Zealand Barry Crump in a Hilux, the "bugger" dog and 100,000 unpretentious Prius hybrids, is now pushing into different forms of mobility – and critically, more lease and car share solutions. It's bought ride share company Cityhop, and is about to acquire a big rental car company – understood to be Ezi Car Rentals.
But speaking to this week's Financial Services Federation conference, Toyota NZ chief executive Neeraj Lala hit back at ministers for meddling in the market rather than allowing companies to focus on reducing the impact of tailpipe emissions.
"Our customers don't care. They're small operators that are just trying to manage costs and keep their businesses running. Inflation, increased wages, a forestry sector that's in a massive downturn – it's not a really big issue for them." – Michelle Herlihy, Speirs Finance
Lala spearheaded criticisms from financiers about a narrow focus on EVs as a solution to private transport – perhaps somewhat ironic, given many of the companies at the conference (including Toyota Financial Services) are financing those purchases.
He was joined by Speirs Finance chief executive Michelle Herlihy, whose fast-growing industrial and forestry fleet finance company has a $500 million-plus loans book. She says the only way EVs will become afforable for the public is when corporate cars are sold into the secondhand market, and that's happening far more slowly than anyone anticipated.
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She warns companies against moving too quickly to EV fleets. "Don't go to EVs all at once, because it's a disaster for most," she says. "It really is a massive change management process."
Speirs Finance also owns lease company YooGo Fleet, where Herlihy says it's able to move more quickly to low emissions vehicles than in its finance business.
"On our asset finance side, our customers don't care. They're small operators that are just trying to manage costs and keep their businesses running. Inflation, increased wages, a forestry sector that's in a massive downturn – it's not a really big issue for them."
"To create an image in public of the benefit, they use cars as an example. I felt like starting my panel discussion today by saying, put your hand up if you came here today in a car." – Neeraj Lala, Toyota NZ
Neeraj Lala was annoyed at comments from Green co-leader James Shaw, a few hours earlier, celebrating the Government's role in increasing in the proportion of EVs from 1 percent to 50 percent of new cars purchased – a result of the clean car rebate. "He didn't quite say it this way but, car companies are the devil. I thought that was quite an interesting reflection."
The Toyota boss spoke afterwards to Newsroom. "The auto industry is the villain. And to justify, or to create an image in public of the benefit, they use cars as an example. I felt like starting my panel discussion today by saying, put your hand up if you came here today in a car."
He'll be asking that National – if it's elected – make its changes to the clean car discount immediately, rather than providing several months warning for buyers and sellers to game the system.
He and Ford NZ chief executive Simon Rutherford will meet today with National's transport spokesperson Simeon Brown. Lala thinks the clean car discount has disrupted sales, especially for commercial vehicles – though he warns that ending it, as National plans, will be equally problematic unless it's done quickly and cleanly.
Commercial vehicle buyers bought their utes before the levy kicked in; now they're holding off buying anything more until National ends it. Meanwhile Toyota has 5,000 commercial vehicles sitting on its lots like "lead bricks" that it can't move.
And because the clean car rebate on EVs is funded by the levies on big diesel and petrol cars, he says the fund is essentially bankrupt. "That fund's already broke. They're going to be in a hole, they're gonna be in a financial hole."
He points to a chart (below) of volatility in car sales, with dramatic peaks and troughs coinciding with government policy changes – most notably the different iterations of the clean car rebate. "This is the impact government policy has on the industry. Honestly, it's like a heart attack monitor."
Lala believes the Government has blocked and slowed innovation in reducing transport emissions. He gives the example of Toyota's tiny two-seater electric C+Pod – legally classified as a quadricycle, and not yet allowed on the road in New Zealand.
It's a game-changer, Lala says, but it's taken nine months for Waka Kotahi to even allow Toyota to trial it on a few roads around Palmerston North.
"When I hear James Shaw going, oh well, one out of two were EVs blah blah in June – well, guess what? No one was buying the commercial stuff that month. It's a Clayton's claim that it's been massively successful." – Neeraj Lala
Policies that worked, like financial incentives to scrap dirty old cars, and leasing hybrid cars to low socioeconomic south Auckland families for $90 a week, have been been thrown on the bonfire. "I know I shouldn't get political but one of the policies that was that was scrapped was the social car leasing scheme. And it's been going spectacularly well, and allows them to contribute to the decarbonisation journey."
And the clean car discount scheme introduced enormous volatility to new and used car sales, as people gamed the system to claim the biggest rebates they could while avoiding paying heavy 'ute taxes'. Now, commercial vehicle sales have ground entirely to a halt while companies wait to see if National is elected, and scraps the dirty diesel and petrol levy as it has promised.
"Catastrophic changes," Lala exclaims. "So when I hear James Shaw going, oh well, one out of two were EVs blah blah in June – well, guess what? No one was buying the commercial stuff that month. It's a Clayton's claim that it's been massively successful, because we went from record year to record lowest year in the space of two months."
Lala says Toyota is on track to achieve a 50 percent emissions reduction from it vehicle tailpipes by 2027 – but that's not by going electric. Indeed, only a quarter of its cars will be 100 percent electric by then; 10 percent will be pure petrol or diesel, and most of the rest will be petrol hybrids – which he acknowledges are powered entirely by fossil fuels.
"You hear politicians say, well, we bought out this policy and it made this and that change. The shift that I'm really proud of is we're moving from climate shaming, to self-guilt. We're seeing a lot of customers shift their purchasing preferences to sustainable alternatives, because they're available, but also because it's the right thing to do."
Toyota has been diversifying beyond car sales, after buying the country's biggest car-sharing business Cityhop.
And Lala says that next month, he'll be announcing the acquisition of a big New Zealand rental vehicle firm. "It will change the landscape for how people can access mobility," he says.
"It's going to be really cool. Because my concern with rental companies is if we want to create a better impact, you've got a target your biggest fleets for the transition. Cars stay on the road in this country for 14 years. If rental firms don't buy something low emission, they are going to grind the gears of the poor second and third and fourth owners, because the service costs will be astronomical as companies stop supporting them.
"Rental firms generally want the lowest price, because the customers pay for it. It's really challenging to get them to pay the premium for a low emission product."
"The mobility landscape will be completely different to how we see it today. Our products will be completely different; it may not quite be Minority Report in five years' time, but I think car and social infrastructure will be better connected." – Neeraj Lala
He declines to name the firm but industry sources say it is Ezi Car Rentals, owned by NZ Leisure Ltd.
That would continue the consolidation of the New Zealand rental vehicle business. Waiheke business leader Kevin Walker created Ezi out of the mergers and acquisitions of A2B Rentals, Nationwide, EziRent and, most recently, Thrifty.
The purchase of Thrifty in December 2021 doubled the size of the company to 130 staff in 24 New Zealand locations, and a fleet of 2,500 vehicles. At the time, Walker said the firm was buying about 3,000 vehicles per year and was one of Toyota NZ's biggest customers.
He estimated the group's rental market share at 12 percent, after major players including Avis, Hertz and Eclipx, which operated leasing brand FleetPartners.
Lala says the way people get around will change dramatically in the next few years. "The mobility landscape will be completely different to how we see it today. Our products will be completely different; it may not quite be Minority Report in five years' time, but I think car and social infrastructure will be better connected."
