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NINETY EIGHT REGENCY

Buyer interest in Toyota tanks

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Buyer interest in Toyota tanks

By Alex Taylor III, senior editorMarch 22, 2010: 11:30 AM ET

NEW YORK (Fortune) -- On the surface, Toyota would seem to be surviving its sudden acceleration crisis in remarkably good shape.

Thanks to one of the most aggressive campaigns of cut-rate financing and cash incentives in its history, the Japanese automaker's sales declined only slightly in February, and early signs point to another strong performance in March.

Better still, the sales-lot promotions haven't cut into the value of Toyota used cars. Kelley Blue Book reported Monday that the average year-over-year change in 36-month residual values for Toyotas is expected to rise 4.2 percentage points in May-June. That's a bit less than the industry average of 6.2 percentage points, but healthy nonetheless.

But according to a confidential market research study reviewed by Fortune, the recalls have battered Toyota's reputation in every measurable category, including brand consideration -- an essential step in the decision process that leads to buying a car.

First the good news: Auto sales are performing strongly in March, and according to DB Equity Research, Toyota is enjoying a dramatic rebound. It estimates Toyota is commanding a retail market share rate of 20%, vs. 14.8% in February and 17.4% in January. Retail market share is an important measure of customer demand because it only counts cars sold to individuals, not fleet sales to rental car companies and others.

More good news can be found in Toyota's sales of certified used cars, those previously-owned vehicles that have been inspected and warranteed by the dealer. According to Automotive News, Toyota's certified sales declined only 7.2% in February, in what was generally a weak month for the industry. Even at that, it handily led other automakers, beating second-place Honda and number three Chevrolet.

While some competitors worry that Toyota's generous new-car incentives may be forcing a price war, others are less concerned. They figure that the new deals are merely attracting people who already own Toyotas and giving them an incentive to replace those cars now, rather than in a few months. The phenomenon is known as the "pull-ahead effect" and it isn't a positive one.

Research conducted by Hall and Partners USA supports that theory. The market researcher surveyed consumers who are considering buying a new car in the next two years and who would consider an import.

The survey discovered that awareness of the Toyota recalls was high at 89%, and its impact on the number of people who would consider buying a Toyota was substantial. Slightly more than half of those who were aware of the recalls said they are either "much less likely" or "somewhat less likely" to consider buying a Toyota in the future.

Results went downhill from there. According to Hall and Partners, Toyota's brand consideration fell to 49% in February from 75% in January. That dropped Toyota below Nissan's 54% and left it at parity with Ford, which scored 49%, and Chevy, which came in at 46%. That's unusual territory for Toyota, which generally far surpasses the domestics in brand consideration.

Toyota also lost ground in February in other measures including relevance, involvement, and opinion.

What it all comes down to is a loss of reputation. Toyota has spent years investing in its good name, not only in the quality of its cars and trucks but also in its personnel practices, corporate citizenship, and charitable contributions.

It is now becoming clear that more drastic methods than those yet announced are needed to stop the slide.

President Akio Toyoda said last week that the automaker still insists on making recall decisions from Japan for the American market. That philosophy, which slows decision time and keeps decision-makers far from the facts, is part of what got Toyota in trouble in the first place.

One person close to the company sums up Toyoda's affirmation, describing Toyota's philosophy for international operations as "colonization," not "globalization."

Until Toyota changes, it faces the danger of becoming just another auto company, forced, like others, to sell the deal instead of the car.

Which is exactly what it is doing now.

link:

http://money.cnn.com/2010/03/22/autos/toyota_buyers.fortune/index.htm

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I totally misread the headline..... I thought to myself, "When did Toyota start building tanks?!" and then "I don't want to be around when THOSE start accelerating out of control!"

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I totally misread the headline..... I thought to myself, "When did Toyota start building tanks?!" and then "I don't want to be around when THOSE start accelerating out of control!"

I'm right there with you, interpreted it the same way.

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Me three. Amazing what adding a comma would have done to the title: Buyer interest in Toyota, tanks.

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Welcome to the year of the deal (if you're toyota)

It's pretty bad when die hard import buyers are buying Kia and Ford....

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I totally misread the headline..... I thought to myself, "When did Toyota start building tanks?!" and then "I don't want to be around when THOSE start accelerating out of control!"

Well, they have tried to build tanks. Sort of.

2102-Toyota-FJ-Cruiser-Trail-Teams-Price.jpg

06_08TundraSport.jpg

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