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PREVIEW-Toyota Feb. U.S. sales hit, rivals gain ground

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PREVIEW-Toyota Feb. U.S. sales hit, rivals gain ground

Fri Feb 26, 2010 3:53pm EST

* What: February U.S. auto sales

* When: March 2, starting at about noon ET

* Toyota sales and market share declines in focus

* Sales rate seen near 10.5 mln; no sign of rebound yet

By Soyoung Kim

DETROIT, Feb 26 (Reuters) - Toyota Motor Corp's (7203.T) (TM.N) U.S. sales for February likely took a hit from massive recalls, but the big question remains how deep the damaging crisis will cut into its results in coming months.

Grappling with its biggest safety crisis in history, Toyota is expected to be one of only two major automakers -- along with Chrysler -- to report sales declines for February.

On an industry-wide basis, analysts expect U.S. auto sales to be near a 10.5 million vehicle sales rate, down from January but higher than year-earlier levels when sales were near the bottom of the deepest downtown in almost three decades.

Industry tracking firm Edmunds.com sees Toyota's market share dropping to 12.6 percent in February, its lowest level since July 2005. The world's top automaker accounted for 17 percent of U.S. sales for all of 2009.

The unprecedented crisis engulfing Toyota, No. 2 in U.S. auto sales behind General Motors Co [GM.UL] last year, is also likely to put a damper on overall industry sales, analysts said.

"The pace of the recovery has hit a speed bump," said Jeff Schuster, forecasting director at J.D.Power and Associates.

"This hiccup appears to be the result of consumers waiting out the Toyota recalls and winter storms impacting showroom traffic."

U.S. auto sales are expected to rise more than 10 percent to a seasonally adjusted annualized rate of around 10.5 million units in February, according to analysts surveyed by Reuters.

That would mark an improvement from 9.2 million units a year ago but a decline from 10.8 million units in January. It would be almost flat from the full year sales rate for 2009.

Analysts expect Toyota's February sales to drop at least 10 percent from a year ago.

Ford Motor Co (F.N), Nissan Motor Co (7201.T) and Hyundai Motor Co (005380.KS) appear to be the big winners, posting sales gains in the range of 20 to 40 percent in February, according to Edmunds.com.

But dealers and analysts said that rivals have had limited success in poaching customers from Toyota, with most customers delaying any decision to abandon the automaker.

"There is a wait-and-see approach by Toyota loyalists," said Chris Hopson, analyst with IHS Global Insight. "They want to see how this plays out before making a buying decision."

Toyota shut down sales of its most popular vehicles in the last week of January, including Camrys and Corollas, while its dealers fixed sticky accelerator pedals in the recalled vehicles. Toyota expects most of its inventory of 131,000 vehicles to be back in showrooms for sale by the end of February.


For all of 2010, Hopson expects Toyota's market share to drop by more than a full percentage point to 15.7 percent.

Ford, the only U.S. automaker to avoid bankruptcy last year, could add a percentage point this year to 16.5 percent of the market, overtaking Toyota as the No. 2 seller, Hopson said.

Asbury Automotive Group (ABG.N) Chief Executive Charles Oglesby said he expected Toyota to offer a "bold" and "aggressive" program of incentives to win back business lost because of its recalls.

"They're doing everything you can think of to restore confidence in their company," Oglesby told Reuters.

"We're not sure as to when they will decide to get back in an aggressive way, but we'll be ready," Oglesby said.

JPMorgan analyst Himanshu Patel agreed, saying that "some level of escalated merchandising seems inevitable."

Toyota's top U.S. sales executives have said incentives were on the way but declined to give specifics.

The moves would cut into the automaker's profit margin and bring it into the kind of expensive discounting that it has historically shunned. (Additional reporting by Bernie Woodall, editing by Matthew Lewis)



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