Toyota Extends U.S. Sales Incentives
DETROIT, April 6, 2010; Bernie Woodall writing for Reuters reported that Toyota Motor Corp has extended broad U.S. sales incentives by a month and widened a maintenance program as the automaker tries to continue a sales rebound in the wake of safety recalls.
Toyota offered record U.S. incentives for the automaker in March to jump-start sales that had fallen sharply amid a sales and production halt and massive safety recalls in the first two months of the year.
The incentives helped boost March U.S. sales by 24 percent industry wide and by 41 percent for Toyota. Toyota's sales had fallen 16 percent in January and 9 percent in February.
The automaker offered zero-percent financing offers on six models for up to five years and widened a free maintenance program for two years to all new vehicle buyers when it extended the incentive program to May 3.
The incentives announcement on Tuesday also follows by one day a decision by U.S. safety regulators to seek an unprecedented $16.4 million fine against Toyota for its handling of a recall for potentially defective accelerator pedals.
U.S. Transportation Secretary Ray LaHood said on Monday that the department had found that Toyota "knowingly hid a dangerous defect for months from U.S. officials."
The proposed fine against Toyota is the largest possible under current laws and the biggest ever by the U.S. government against an automaker. Safety regulators are continuing to investigate Toyota to see if there were additional violations.
Toyota pared the vehicles on which it was offering zero percent financing to six in April from eight in March. Toyota extended the offer on the Camry, Corolla, Yaris, Avalon, Matrix and Tundra. It cut the offer on Highlander and Rav4.
The announcement of Toyota's sales incentives in early March triggered a price war that is expected to continue into at least May. Every major automaker selling in the U.S. market matched at least part of the Toyota offerings.
After a regional meeting with Toyota dealers in suburban Chicago, Don Esmond, senior vice president of automotive operations at Toyota Motor Sales USA, said the automaker did not intend to make the incentives a long-term habit.
"It's not our strategy, it is a tactic. We will keep them competitive," Esmond said.
Esmond said the incentives were still well below those offered by some rivals and he did not believe Toyota's sales in March were gained at the expense of sales in future months.
"Some of our competitors have incentives of $3,000 to $4,000. We're no where near that," Esmond said.
After the meeting with Toyota sales officials, dealers said they did not expect the strong incentives to continue over the long term.
"Toyota went through some unprecedented negative publicity and we needed to send a positive message to the customers," Fred Mark, a Waukegan, Illinois, Toyota dealer said of the incentives. "We also are still in the midst of a recession."
Jim Tessmer, a Toyota dealer from Milwaukee, said there was always "that fear" that incentives would have to continue, but he said consumer confidence was coming back, the stock market was rising and customers were returning to the stores.
The extension of the incentives, which were to expire on April 5, was widely expected and Toyota executives have been pointing to it for at least a week.
Toyota said specific offers vary in different regions of the United States, as shown on the company's website.
Additional reporting for Reuters by Rick Popely in Chicago and David Bailey in Detroit; editing by Gary Hill and Andre Grenon