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Toyota plans incentive, warranty campaigns to restore consumers' faith

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Toyota plans incentive, warranty campaigns to restore consumers' faith

Kathy Jackson, Amy Wilson and Jason Stein

Automotive News -- February 13, 2010 - 6:56 pm ET

ORLANDO, Fla. -- Toyota is planning a heavy incentive program and possibly a new warranty campaign to combat mounting consumer concerns about the automaker amid its recall crisis.

“It won't be a fire sale like people thought GM and Chrysler had when they were in trouble,” Don Esmond, senior vice president of automotive operations at Toyota Motor Sales U.S.A. Inc., told Automotive News. “But we will be competitive.”

Esmond said Toyota met with its dealer ad committee this week and is finalizing the marketing push that will begin in March.

Esmond didn't provide details of the effort. One dealer with knowledge of the plan said Toyota “will try to win back customers at all costs.”

That source and another with knowledge of the strategy said a range of options is being considered, including:

• Extending new-car warranties to give Toyota the best in the industry.

• Owner loyalty cash, perhaps in the thousands of dollars.

• A warranty for used vehicles.

• Assistance to dealers to pay for floorplanning of used-car inventory.

• Providing cash to dealers to allow them more discretion in making repairs not addressed by the various recalls.

The marketing plan was reported earlier by Bloomberg News.

Restoring confidence

Toyota is banking on incentives and extended warranties to restore customer confidence after a January recall of 2.3 million Toyota-brand vehicles in the United States addressed unintended acceleration complaints linked to sticky gas pedals in eight models.

The Prius hybrid and Tacoma pickup have since been called back for separate problems. A U.S. recall last fall covered more than 5 million Toyota and Lexus models to address floor mats that can trap accelerator pedals.

The Toyota brand's U.S. sales fell 19 percent in January, while the overall market gained 6 percent.

Toyota plans to wait until after this month's Congressional hearings on the recalls before finalizing the plan, one of the dealer sources said.

Toyota has told its dealers: “All the missiles are loaded. We're just figuring out which buttons to push,” the person said.

Esmond also said 400,000 of the potentially faulty gas pedals have been fixed. When the marketing efforts begin, they will focus on Toyota's best-selling cars: the Camry and Corolla.

“This is a temporary hiccup in my mind,” Esmond said. “We'll be in good shape.”

He said the incentive programs will vary by region, concentrating on leases in the East and financing with low annual percentage rates in the Midwest.

“We must lock down our buyers first, then the conquest buyers,” he said. “I don't think our armor is rusted through, but it's tarnished a bit. We still have a lot of loyalty out there.”

Read more: http://www.autonews.com/article/20100213/RETAIL06/100219928/1379#ixzz0fSvUhi3y

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Here's the second phase of Toyota's undoing: peddling cars with cash on the hood and it will keep on and on until it breaks the bank.

Edited by whiteknight
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Here's the second phase of Toyota's undoing: peddling cars with cash on the hood and it will keep on and on until it breaks the bank.

yeah, but the sheep will come wondering back to the "best deals evar!"wacko.gif

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yeah, but the sheep will come wondering back to the "best deals evar!"wacko.gif

That's the thing though. What I see happening is Toyota not being able to keep themselves away from incentives in fear of losing sales. So they'll keep putting so many thousands of dollars on the hoods of Camries and Highlanders to keep people buying until Toyota is losing serious cash on every car they sell. When Toyota begins to lose money, the incentives go away. And when all of that cash on the hood is gone, sales go with the good deals and low fiance rates. There isn't anything in their current line-up or future product pipeline that excells beyond what the competition builds. In fact, many models are subpar. Toyota, in reality, doesn't have a single car that could sell itself after the damage dealt to its public image.

It really is Old GM all over again, just sped up 5 times normal speed.

Edited by whiteknight
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where toyota differs......GM had/has multiple brands, and some brands were able to take the hit on transaction prices and not drag down all the other brands so much. Plus, people bought GM etc. for things like design, performance, emotional things.

if toyota suffers a big hit in new transaction prices, that literally is most of their sales. they only have lexus to offset that. Buick, GMC, Cadillac, all have the ability to bring in product now at some higher prices. I don't think Toyota and Scion can pull that off.

I do think Toyota is also being overly optimistic. People who were loyal to toyota were so only because of its one trick pony...reliability. Well, this lapse in safety and all the recalls can pretty much put any good will about the reliability far back in people's minds.

Then, toyota is left to sell the vehicles in the same arena as everyone else. Toyota can't really count on being able to sell their stuff in terms of design, performance, resale, warranty, sales experience, they will be selling vehicles cheap to maintain volume so their profits will be gone......

in every segment toyo is in, once their reliability is a non factor, you are at the point where you honestly can't really place them a top any market segment. in just about everything, there is always a better choice than toyota. they need to understand this.

i think toyota is in a little bit of denial still about all of this........the hit on their rep is permanent.

Edited by regfootball
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Toyota is already losing money.

In October-November-December of 2009, Toyota made $1.7 billion in profit. A year ago they were losing money, but they have made a profit 6 months in a row.

What worries me, is at the auto show, Toyota still had a lot of people looking at their cars. People still seem willing to buy them, because Toyota has had a bad reputation for 2-3 months, GM and Chrysler have had a bad reputation for 2-3 decades. Not enough damage has been done to Toyota yet to bring them down. They'll suffer for a few months, then the sheep will all come back.

I agree with Reg that in nearly every segment there is a better choice than a Toyota, usually there are 2-3 better choices. But their reputation is so strong it doesn't even matter. I hope this brings Toyota down a lot and makes people wake up, but I think in a few months people will forget about it.

Edited by smk4565
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toyoyo's reputation has been tarnishing for the better part of 5 years- ever since the recalls slid past the 2 million mark. It has been nothing but downhill ever since- not 2 months :lol: but without question AT LEAST 3 years. More specifically, the staggering volume of recalls have not been for simple misses like a missing page in the owner's manual or emissions-equipment related, but huge and very elemental stuff like rotting frames, ripping sheetmetal, and the more recent out-of-control stuff. There really is not a worse case scenario as far as PR is concerned... short of spontaneous explosions. The fallout is FAR from over on this- it'll take YEARS to properly analyze the damage.

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where toyota differs......GM had/has multiple brands, and some brands were able to take the hit on transaction prices and not drag down all the other brands so much. Plus, people bought GM etc. for things like design, performance, emotional things.

if toyota suffers a big hit in new transaction prices, that literally is most of their sales. they only have lexus to offset that. Buick, GMC, Cadillac, all have the ability to bring in product now at some higher prices. I don't think Toyota and Scion can pull that off.

I do think Toyota is also being overly optimistic. People who were loyal to toyota were so only because of its one trick pony...reliability. Well, this lapse in safety and all the recalls can pretty much put any good will about the reliability far back in people's minds.

Then, toyota is left to sell the vehicles in the same arena as everyone else. Toyota can't really count on being able to sell their stuff in terms of design, performance, resale, warranty, sales experience, they will be selling vehicles cheap to maintain volume so their profits will be gone......

in every segment toyo is in, once their reliability is a non factor, you are at the point where you honestly can't really place them a top any market segment. in just about everything, there is always a better choice than toyota. they need to understand this.

i think toyota is in a little bit of denial still about all of this........the hit on their rep is permanent.

Very good post and there are many factors that you mentioned that I failed to take into account.

In the end though, the recalls are only the beginning for Toyota.

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