Toyota makes deals and drive the market up. Don't expect it to last

Posted by: David Welch on March 24, 2010

If mid-month sales numbers from Edmunds.com are any indicator, the car market may be finally picking up. The Santa Monica, Calif.-based consumer research site says that through Mar. 18 , car sales were on pace for a 13.5 million annualized adjusted sales rate. That’s a nice clip considering that most analysts think car sales will be in the 11 million or 11.5 million range. But don’t get too excited yet.

Edmunds also says that there are a lot of deals in the market right now. Toyota is trying to put a salve on its market woes with zero-percent financing and other deals. Competitors followed suit with big incentives of their own. Toyota’s offers boosted consideration of their cars by 40%, Edmunds said. And that 13.5-million vehicle sales rate says that other car companies are finding takers for these deals, as well. In other words, the auto companies are buying the sales boost

Carmakers are loathe to continue such discounting. Look at the trouble General Motors, Ford and Chrysler got in throughout the decade by splashing cash for sales. Chrysler is still doing all it can to keep sales going until new models arrive. But GM and Ford have worked hard to get better pricing on their newest cars. Ford has bragged about fatter prices in recent earnings announcement. GM CEO Ed Whitacre wants sales growth without having to buy it. Even Toyota, battered as the company is by its string of recalls, won’t want to give away its long-held pricing advantage, either. That leads me to believe that the deals won’t last all year. It’s at least a good sign that people are willing to shop at all. Just temper the enthusiasm until consumers go back to showrooms without needing a bribe.

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Reader Comments

Accazzdatch

March 24, 2010 08:00 PM

I think its "fantastic" that Toyoda is doing discounts... yeah its a real fantastic idea.

Their cars are recalled for a dozen different reasons, they cant even figure out why half of the cars arent recalled.

Heck,
It’s not just the defect, but the multiple defects, on multiple RELATED VEHICLES, the burying of the defect, government lobbying to avoid a recall, the botched recall and the other non-related safety defects that have emerged over the last five years. What kind of bonehead would even consider a new Toyota after this? “Quality” my a$$. They have a lot to prove before “Toyota” will ever be synonymous with “quality” again.

And a damn 0% interest on a loaded Camry doesnt tell me shit. They are desperate, please ignore our issues and buy the car that we really cant fix properly. -- but make it, "Beige with the 4cycl."

Real World

March 25, 2010 09:44 AM

Far too many people are not working or are underemployed. Car sales will be in the 11 to 12 million range at best for the rest of the decade. The key to automakers surviving is for them to learn how to be profitable in that volume range.

They also have the benefit of knowing how not to attempt it- The Daimler, then Cerebus "cut research and development to increase profits" approach, which left the world with its first Italian / American company, which sells just about zero vehicles worldwide.

Mrpushrod

March 25, 2010 10:02 AM

Toyota has other obstacles to overcome. Till now, Toyota has been building the worst handling vehicles sold in America. For example: both the Lexus LS460 and Toyota Avalon sedans posted the slowest speeds in Consumer reports accident avoidance tests. This did not stop Consumer reports from giving them the highest test scores out of any comparable vehicles. I quote Consumer Reports Corolla review: THE STEERING IS A BIT LIGHT AND RATHER VAGUE. This is a possible recall now because the Corolla handles like a cruise ship. Consumer Reports put safety in the back seat in order to cater to the demographics of their customers and sell more magazines. They highly recommended all of these dangerous vehicles. Currently, Consumer Reports does not disclose the data (individual weight applied to each of the tests in the test suite) it uses to calculate the final test score of a vehicle. This allows their auto testers to pick and choose the winners (highest test scores) according to what their customer base wants to hear. Did the stitching in the leather interior affect the score more than safe handling? Only the biased testers at CR know. Furthermore, the CR reliability study is not random like reputable institutions such as J. D. Powers. Their survey is sent only to their (cult like) members that purchase the biased CR magazine. Data derived by CRs surveys is always tainted toward the big three (Toyota, Honda, Nissan). This is obvious when data is compared to national random surveys. This ordeal has been a wakeup call for the arrogant auto staff @ Consumer Reports who recommended Toyotas even a few days after Toyota recalled them. Fortunately for Ford and GM all eyes are on Consumer Reports and Toyota. They let the public down by ignoring safety for years to prosper financially. I bet Consumer Reports will go with the flow and start critiquing Toyota. Toyota will have to start producing completive safe handling agile vehicles in the future because the perception game is finally over.

Ina Garten DaVida

March 25, 2010 01:12 PM

And now Honda is firing back big-time, with 0 down leases...

I'd almost, ALMOST consider one.

steve85

March 25, 2010 03:54 PM

Has anyone noticed that Toyota is playing the patriot card? While I disagree with what http://www.weltbranding.com/blog/ says about it, they are at least one blog that has caught on to the flag waving commercials.

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Want the straight scoop on the auto industry? Detroit bureau chief David Welch , Dexter Roberts and Ian Rowley bring daily scoop, keen observations and provocative perspective on the auto business from around the globe. Read their take on such weighty issues as Detroit’s attempt at a comeback, Toyota’s quest for dominance and the search for an efficient car.

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