Toyota Motor Corp may keep aggressive discounts available for the US consumers beyond this month after unprecedented incentives sent its US sales sharply higher in early March, an executive said on Friday.
Toyota's US sales surged 40 per cent in the first 10 days of March compared with the year-earlier period after the automaker offered zero-per cent financing and other incentives, Don Esmond, senior vice-president of Toyota US sales, told Reuters in an interview.
Esmond said Toyota would evaluate March sales results and reaction from dealers and consumers before deciding whether to extend the discounts, which the company called its most "far-reaching sales program in history."
"We'll continue to keep the dealers competitive in the marketplace," Esmond said, speaking to Reuters by telephone after meeting with the company's dealers in Cleveland, Ohio.
"I think we will have to take a look at results and reevaluate, but the promise I made to dealers was that we will continue to make them competitive," he said.
Esmond said Toyota expects to regain most of its US market share lost in the past two months in the wake of a damaging series of recalls that have tarnished its reputation for quality.
Toyota's US market share plunged to 13.4 per cent in the first two months of this year, down from nearly 17 per cent for all of 2009. Toyota was behind General Motors Co and Ford Motor Co in US sales so far this year.
"If you look at our royal Toyota owners, certainly Toyota owners have stood by us. They've got good confidence in the brand and the products," Esmond said.
"For us, it's a pretty big step up, but still if you look at what the competitors spend per vehicle basis, we are still 30 per cent below our competitors," he said.
As recently as February, Toyota's incentive spending averaged $1,833 per vehicle, compared with $3,434 per vehicle on average for GM, according to industry tracking firm Edmunds.com.
Toyota, which has traditionally spurned steep discounts in order to protect resale values, is offering zero-percent financing for five years on top-selling models, including the Camry, and free maintenance for two years to win back US consumers after a series of product safety problems.
Gregg Lemos-Stein, an autos analyst with Standard & Poor's, said such deep discounts would appeal to people who remain undecided about the brand and to whom the price was a major impediment to buying Toyotas, but it has the risk of cutting into profit margins as well as resale values longer term.
"The reason why it's key," Lamos-Stein said of residual values, "is that, traditionally, Toyota has had an advantage on leasing and financing its new vehicles based on strong resale values."
