Toyota dealers busted selling new cars as 'used vehicles' with inflated prices – and there's nothing to stop them - Drive

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Toyota dealers are advertising brand-new vehicles as "used cars" at drastically inflated prices, while customers in the queue wait months and in some cases years.

08:5514 August 2023

Toyota dealers busted selling new cars as ‘used vehicles’ with inflated prices – and there’s nothing to stop them

Toyota dealers in Australia are openly advertising brand-new, in-demand hybrid models at wildly inflated prices by moving them across to their used-car departments – or discreetly selling them to wholesalers or friendly rival dealers – as thousands of customers in the queue wait months and in some cases years.

Customers stuck in the queue have voiced their anger on social media about dealers moving brand-new Toyota hybrid cars onto their used-car lots – or to industry contacts who move the vehicles on their behalf – to sell them for much higher than normal retail prices.

Now there is clear proof the rogue practice is real – and Toyota Australia has conceded there is nothing it can do to stop the price-gouging because it is not against the law.

A customer waiting for a Toyota Corolla Cross Hybrid contacted Drive and shared examples of brand-new cars for sale with 6km and 33km on the odometer.

Drive also unearthed countless other examples after a quick search online, and found dozens of brand-new Toyota RAV4 Hybrids – and other Toyota models – with between 1km and 50km on the odometer, but advertised as "used cars".

Some brand-new "used cars" appeared to be offered for sale by Toyota dealers (you can see Toyota signage in the background), while other cars appeared to have been advertised at a premium via wholesalers or nearby friendly rival dealers.

In the examples given to Drive by one frustrated customer, both cars appeared to be for sale by the same Toyota dealer – the cars were photographed inside a Toyota showroom rather than a used-car lot – and the number plates were only a few digits apart and the vehicles had only just been registered.

One example (6km) was advertised for $53,990 and the other example (33km) was advertised for $53,888.

According to the pricing calculator on the Toyota Australia website, the exact same model – Toyota Corolla Cross GXL Hybrid all-wheel-drive – is estimated to cost $47,541 drive-away (Sydney, metro) .

The price premium for the brand-new examples of the Toyota Corolla Cross advertised as 'used cars' is more than $6300 – or 13 per cent – dearer than a new model.

Examples unearthed by Drive showed the price premium on brand-new Toyota RAV4 Hybrids advertised as "used cars" is even higher – between $8000 and $10,000 more than the recommended drive-away price on the Toyota Australia website calculator.

When the customer who contacted Drive had alerted Toyota Australia to his particular examples – just two of dozens also found by Drive online – he said he was dismayed to receive the following response:

"Thank you for your recent enquiry received by the Toyota Guest Experience Centre.

"As a result of unprecedented global and local demand for Toyota vehicles, in addition to the continued impacts of the global coronavirus pandemic, our vehicle production has been impacted by continued parts shortages. Due to these challenges, Toyota is experiencing longer wait times for new vehicle deliveries across its range.

"Unfortunately, this has resulted in an increase of price to the second-hand market as these vehicles are readily available. As each Toyota dealership is independently owned and operated, pricing for second-hand vehicles is up to their discretion."

Toyota Australia dismissed the price-gouging by the unknown dealer as a market trend.

"Second-hand market prices are not set by the dealer. However, as the market is already inflated, dealerships price their second-hand vehicles to keep up with the second-hand market," said the response to the customer from Toyota Australia, a copy of which has been obtained by Drive.

Furthermore, despite previous assurances to the contrary, it appears Toyota Australia is not taking steps to ensure customers next in the queue get access to cancelled orders.

"If a (customer) has ordered a new vehicle but they no longer want it and sell it back to the dealer, this would be considered a used vehicle," the response from Toyota Australia to the customer said.

"There are other reasons why a vehicle may be considered second-hand, however we are not privy to these transactions and therefore cannot comment on why there would be second-hand vehicles with low kilometres.

"We recommend that you continue to speak with your dealer regarding any updates for your specific vehicle order. We do understand this can be frustrating for customers and apologise for any inconvenience caused.

"We thank you for your feedback and have taken this opportunity to forward your comments to our marketing department who would collate all such material for consideration."

The examples of Toyota dealers price-gouging on brand-new cars being sold as "used cars" for inflated prices – rather than to the next customer in the queue – comes as there is renewed focus on setting fixed prices for new cars in Australia.

Honda and Mercedes-Benz controversially switched to non-negotiable fixed prices in Australia over the past two years.

While Honda sales have since tanked, Mercedes-Benz has found itself in the middle of a Federal Court battle launched by a large group of dealers who say the terms of the change are unfair. The judgement is due in the coming weeks.

Joshua Dowling has been a motoring journalist for more than 20 years, spending most of that time working for The Sydney Morning Herald (as motoring editor and one of the early members of the Drive team) and News Corp Australia. He joined CarAdvice / Drive in 2018, and has been a World Car of the Year judge for more than 10 years.