Toyota Motor Sales, its regional distributors, and the Lexus Motor Division recently gave notice to dealers across the United States that it planned to change their assigned territory by adding and taking away certain census tracts.
Toyota and Lexus announced that they were reassigning census tracts to dealers based upon drive distance from the census tract to the nearest dealership instead of the prior measurement using air miles. Although an improvement, drive distance does not take into account shopping patterns and drive times from one dealership to another. A dealership can be closer by drive distance but yet not the most likely store at which the customer will shop. Shopping patterns can cause customers to drive in a different direction than what drive distance would dictate. Likewise, a customer will be happy to drive farther if the drive time is shorter.
BSM has filed challenges to proposed territory changes on behalf of Toyota and Lexus in a number of states pursuant to franchise law protections. These protests seek more detailed information regarding the new census tract assignments. In particular, what is important is to determine whether residents of these census tracts will, in fact, find the dealership to which they are assigned as the most convenient at which to shop for a new vehicle. Looking at which dealership sells the majority of Toyota or Lexus vehicles in a census tract as well as the drive time from the census tract to facing Toyota or Lexus dealerships will assist in determining the proper assignment of a census tract.