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GM Aims Incentives at Toyota Owners on Safety Concern

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GM Aims Incentives at Toyota Owners on Safety Concern (Update2)

January 27, 2010, 03:33 PM EST


By Jeff Green

Jan. 27 (Bloomberg) -- General Motors Co. is starting a campaign today aimed at selling GM models to owners of 2.3 million Toyota Motor Corp. vehicles that are subject to a recall because accelerator pedals may stick.

The program, which runs until the end of February, follows GM dealers receiving “thousands of calls” from Toyota customers who were concerned or wanted help buying a GM model, Steve Hill, general manager of retail activities for the Detroit-based automaker, said in an interview. The program is available on most Chevrolet, Buick, Cadillac and GMC models.

The incentives may help GM vie with Ford Motor Co., Honda Motor Co. and Hyundai Motor Co. for customers after Toyota, the world’s largest automaker, halted sales of eight models including the top-selling Camry and Corolla cars. GM Chief Executive Officer Ed Whitacre has said his company must sell more vehicles to make a profit this year.

“This is a good move by GM,” said auto analyst John Wolkonowicz of IHS Global Insight in Lexington, Massachusetts. “This helps GM because while its quality is quite good and much improved, it hasn’t received the public accolades that Honda, Ford and Hyundai have.”

U.S. law required Toyota to stop sales of the eight models until it fixes the “dangerous” pedal flaw, the National Highway Traffic Safety Administration said today. Toyota made that move yesterday and also ordered a halt in production.

‘Reasonable Request’

“Safe and high-quality transportation is a reasonable request from a customer,” said Susan Docherty, head of GM’s U.S. sales and marketing. “We want to be able to provide peace of mind to customers and all of our vehicles are safe.”

Toyota’s American depositary receipts fell $7.74, or 8.9 percent, to $79.04 at 3 p.m. in New York Stock Exchange composite trading. The ADRs declined as much as 9.1 percent earlier for the worst intraday drop since Jan. 22, 2009.

The automaker will offer no-interest loans for as long as 60 months for purchase of a new GM model with a Toyota trade-in, Hill said. For Toyota lease customers, GM will make as many as three payments, or a maximum value of $1,000, and dealers will offer another $1,000 toward trade-in assistance, he said.

GM stands to gain a temporary market share increase of 2.4 percent, said Brian Johnson, an automotive analyst at Barclays Capital in Chicago in a note to investors today. Honda may gain 2.1 percent and 1.6 percent of buyers may temporarily shift to Ford, Johnson said.

‘Like a Vampire’

Those gains are based on Toyota’s 18.2 percent share of the retail sales market, which exclude sales to fleet customers, according to Ward’s Automotive.

“We are looking at the situation, but we’re not announcing any programs,” said Robert Parker, a spokesman for Dearborn, Michigan-based Ford. “There are discussions going on today.”

Hyundai, South Korea’s largest automaker, may gain about 0.7 percent of the U.S. market, Barclays said.

“We discussed doing a program aimed at Toyota and decided it wasn’t appropriate,” said Chris Hosford, a Hyundai spokesman. “Knowing that some Toyota customers might be looking for models that they can’t get and consider ours, we are taking steps such as making sure our dealers have adequate supply. But we don’t want to jump on this thing like a vampire.”

--With assistance by Keith Naughton, Doron Levin and Mike Ramsey in Southfield, Michigan. Editors: Steve Walsh, John Lear



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