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Toyota uses cash offers in bid to get rolling

Mon, 19 Jan 2009

Coming off a sharp sales decline in December, Toyota Division is trying to lure buyers into showrooms with new cash offers for customers and dealers.

Even the Prius is getting support, after having been excluded from the brand's lavish incentive program in the last quarter of 2008. Toyota put $750 in dealer cash on the hood of the hybrid car.

The new cash incentives are a reversal of Toyota's marketing tactics for the past three months, when the division emphasized 0 percent financing, low interest rates and lease programs.

Those incentives generated little interest. Toyota's sales fell 36.7 percent in December, underperforming the market. So for January, Toyota is turning to cash.

"We're going to keep our dealers competitive in the marketplace," Jim Lentz, president of Toyota Motor Sales U.S.A., said last week at the Detroit auto show. "Down payment and negative equity is more important for consumers, so they want more cash rebates."

The incentives began Jan. 6 and will run through Feb. 2.



Cash on big sellers

Toyota's trucks get the bulk of the support, including $2,000 dealer cash on the 2009 full-sized Tundra pickup and $4,000 customer rebates on the 2008 Tundra.

But dealers are particularly excited about the cash programs on the 2009 Camry, Corolla and Prius--Toyota's three top-selling vehicles.

"Whenever they put something on Camry, that's great," said Brad Paul, owner of Ardmore Toyota in Ardmore, Pa. "The $750 on Prius is a great help. Corolla, Camry and Prius are the big ones. The others are much less a percent of the business."

Toyota has put $1,500 customer cash on Corolla's base and LE trim levels and $1,250 customer cash on all other trim levels. All Camry trim levels are getting $1,000 customer cash and $500 dealer cash.

"I'm sending e-mails to anybody who has been in the dealership the past 90 days to tell them about the rebates," Paul says. "The ad associations also are getting the message out."

Overall, Toyota had a 90-day supply of vehicles at the end of December, compared with a 46-day supply in December 2007. Even the Prius ended the year with a 40-day supply. During the first half of the year when gasoline prices were high, the hybrid was getting as much as $5,000 over sticker.

'Our signature vehicle'

"I've been pushing Toyota" for Prius rebates, said Earl Stewart, a Toyota dealer in North Palm Beach, Fla. "Prius is our signature vehicle. Now that I've got the dealer money, I can order more and sell the whole line."

Stewart has been offering his own cash rebates of $2,000 on the top-of-the line Prius and $1,200 on the base model.

"The $750 is a good number," he said. "It's no longer a seller's market for the Prius. "We need to treat the Prius like a Camry."

Bob Carter, general manager of Toyota Division, admits that the Prius has suffered lately--particularly in California, where he said inventories are highest.

Besides low fuel prices, Carter said, Prius demand has slowed because a redesigned model is due this spring.

"Currently, there are 700,000 units in operation," Carter said while showing the new model at the Detroit auto show. "More than 90 percent of current Prius owners say they intend to buy another one."

Carter said he thinks Toyota can continue to gain share in 2009.

In addition to the redesigned Prius coming in the spring, Toyota launched the Venza crossover late last year. In February, the 2010 Camry gets a new 2.5-liter, four-cylinder engine.

"Do I like it that sales are down? No," said Carter. "But we're the number-one franchise, and we gained share when the market was contracting."




By Kathy Jackson- Automotive News