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Has Toyota Kicked Off New Incentives War?

Givebacks could position Japanese maker as #1 in market.

by on Apr.22, 2010

Toyota's big incentive campaign could make it #1 in the U.S. market for April - and touch off an industry-wide incentive war.

After suffering huge sales declines during the first two months of 2010, Toyota could be positioned to pull off a miraculous recovery for April, possibly even pushing past General Motors to become the nation’s top-selling automotive manufacturer for the month.

If that happens, the still-troubled Japanese maker will owe credit to some of the most lucrative incentives it has ever offered in the U.S. market, something the maker had sworn to avoid until its safety scandal sent sales tumbling.

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The question is whether Toyota’s new-found fascination with rebates and other givebacks will wind up touching off the sort of profit-killing incentive war that the industry had hoped to avoid as it emerged from the most devastating downturn since the Great Depression.

“Clearly, when a major competitor pulls out all the stops (we) can’t sit idly by and watch that happen,” warns Bob Lutz, General Motors’ soon-to-retire vice chairman.


Incentives Paying Off Big for Toyota

Dealers reporting huge gains in sales as cash deals overcome buyer concerns about recalls.

by on Mar.11, 2010

Cash on the hood gets customers back into Toyota showrooms for products like this 2010 RAV4.

You may have to take a number and wait if you walk into Continental Toyota, in Hodgkins, Illinois.  After suffering a huge slump, last month, in the midst of the maker’s ongoing recall crisis, sales have taken off like a shot since Toyota rolled out some of its best-ever incentives.

Across the country, sales have jumped by as much as 50%, so far this month, Toyota Senior Vice President Don Esmond told partsmakers supplying the maker’s North American plants.

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That’s a significant turnaround from February, when problems with Toyota products grabbed nearly daily headlines and the company’s senior management was grilled aggressively by lawmakers on Capitol Hill.  For the month, Toyota sales were down about 10%, in sharp contrast to key competitors such as Honda, General Motors and Ford, most of whom posted solid, double-digit gains for February.

“Business has been very good” for the first third of March, said Dennis Pecho, general manager of Continental Toyota.  “Compared to last month, it’s more than doubled.”


Toyota Readying Big Discounts, Longer Warranties

Struggling maker will pitch deals to win back buyers.

by on Feb.15, 2010

Struggling to overcome the damage done by a series of safety problems and an expanding list of recalls, Toyota is expected to try to win back skeptical consumers with a bevy of new discounts, as well as extended warranties.

While final details have yet to be determined, the maker is running a variety of ideas past its American dealers, who have been gathered in Orlando, this weekend, for the annual convention of the National Automobile Dealers Association.

Traditionally, Toyota has shied away from big rebates and other incentives, but the maker has ramped up givebacks, in recent months, hoping to counter the impact of the ongoing American recession.  Now it could add$1,000 or more to its offerings, according to sources, in an effort to overcome growing concern about the safety, quality and reliability of its products.

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The maker also is reportedly considering longer warranties, perhaps matching the 10-year program offered by fast-rising rival Hyundai, of South Korea.  The programs would be launched by the beginning of March. And the new package could add free maintenance, as well.

“Toyota has got to be aggressive on this,” the Bloomberg news service quotes Mike Maroone, chief operating officer of AutoNation, the largest American automotive retailer. “Toyota has to put a wall around its customers.”


Is Another Rebate War Brewing?

by on Sep.03, 2009

Even during the Cash-for-Clunkers program, Toyota ramped up incentives; now it's offering 0% financing on models like this 2010 Toyota Corolla.

Even during the Cash-for-Clunkers program, Toyota ramped up incentives; now it's offering 0% financing on models like this 2010 Toyota Corolla.

For a month, at least, things almost seemed to be back to normal around the auto industry, assembly lines humming and dealers racing to write up sales orders.  But now that the Cash-for-Clunkers program has wrapped up, there’s mounting concern, across the auto industry, that August’s momentum could quickly be lost – or that the industry could be forced to launch a new round of costly rebates and other incentives.

“Cash for Clunkers proved Americans would buy a car if they got a good enough deal – and one available for a limited time,” says Stephanie Brinley, an automotive analyst with AutoPacific, Inc. “But the industry is going to have to come up with some pretty big and clever programs to keep from losing the momentum.”

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Despite the big payout from the federal government, new research from Autodata Corp. shows the industry handed out an average $2,265 in rebates, subsidized loans and other incentives, last month, an increase of 31% from August 2008.  And there are signs, already, that a big bump may be in the works – notably among Asian makers, like Toyota and Honda, that lag, rather than lead, the rebate wars.