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Toyota extends incentives another month

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Toyota extends incentives another month

Carmaker ups pricing pressure on Detroit rivals after deals boost March sales 40%

Christine Tierney / The Detroit News

Toyota Motor Corp., struggling to hold on to its customers after a series of damaging recalls, will extend the generous incentives it introduced in March for at least another month, a top company official said Wednesday.

Toyota's decision was not surprising. Its U.S. dealers have been pressing the Japanese automaker to provide discounts for a sustained period of time to help them win back customers.

But Toyota's move puts pressure on its rivals, particularly Detroit's automakers, which have been trying to reduce their reliance on incentives to sell vehicles. Over time, high discounts erode residual values, brand image and ultimately profitability.


Bob Carter, group vice president at Toyota Motor Sales USA, told reporters at the New York International Auto Show that the automaker would continue to offer zero-interest financing and discounted lease offers for at least another month and may make free maintenance standard for Toyota customers.

Toyota introduced those incentives -- unusually generous by its standards -- in March after a difficult start to the year.

The company has been hurt by big recalls that prompted U.S. safety regulators to order a brief halt in sales of many Toyota vehicles in January. Since November, Toyota has recalled 8.5 million cars and trucks worldwide, including 6 million in the United States.

Its incentives succeeded in boosting Toyota's March sales around 40 percent from weak year-earlier levels. Carter said the company will outline its new offers this coming Monday, when the current incentives expire.

Analysts have expressed concern that Toyota's use of incentives to reward its loyal customers and court undecided shoppers could spark a price war.

But some of Toyota's rivals say they believe this is a temporary strategy.

"I believe that's a short-term thing," said Jim O'Donnell, president of BMW North America. "It doesn't seem to be part of their DNA."

He said Toyota's premium Lexus brand hasn't been discounting vehicles but is spending more instead on marketing and advertisements.

ctierney@detnews.com (313) 222-1463

From The Detroit News: http://detnews.com/article/20100401/AUTO04/4010351/1148/auto01/Toyota-extends-incentives-another-month#ixzz0jr1MtwAk

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