Toyota Motor Sales U.S.A. Inc. is taking the launch of its new Tundra in stride, refusing to panic over the prospect of using higher incentives to move the fullsize pickups off dealer lots.
Toyota last week added a $1,000 trade-in allowance on top of a discount of up to $2,000, a move considered unusual for a vehicle less than two months into its launch, particularly for Toyota.
But executives say that’s just part and parcel of today’s highly competitive truck market.
“Certainly the whole segment is very incentive-driven,” Don Esmond, senior vice president-automotive operations, says during a conference call with reporters to discuss March sales. “If you look at the market, a lot of competition has been ramped up. There’s $5,000 cash, trade-in cash, dealer certificates – a lot is going on in the market.”
Esmond says Toyota’s incentive programs vary regionally, but most are focused on “transaction issues,” helping dealers close the sale by contributing to trade-in allowances or financing. “We will continue to monitor the market to stay competitive,” he says.
Toyota delivered 13,196 Tundras in March, up 7.8% on a daily-rate basis from year-ago (28 selling days vs. 27), when 11,800 were sold.
Toyota is sticking to its forecast for sales of 200,000 Tundras in this calendar year, Esmond says, and he expects demand to escalate as the auto maker finishes the production rollout that is seeing CrewMax models now beginning to dribble in to dealers.
Esmond says Toyota should begin to have the right mix over the next 60-90 days, and “we’re excited about what the market will hold.”
Toyota says it has sold 16,000 Double Cabs so far this year, triple last year. It accounts for about 83% of the Tundra’s mix to date, with regular cabs accounting for about 8% and the CrewMax 9%. Over time, Toyota expects that to shift to 6% regular cab, 64% Double Cab and 30% or more CrewMax. Initial demand for the 5.7L V-8 has been stronger than anticipated, the auto maker says.
Tundra customers mostly are Toyota owners, Esmond says, with some sales coming from buyers switching brands, new to the pickup segment or first-time vehicle buyers.
General Motors Corp. says it hasn’t been impacted by the Tundra, confirming Esmond’s take that most buyers are Toyota loyalists.
“Toyota is drawing from a very loyal Tundra customer base right now,” says Paul Ballew, GM’s executive director-global market and industry analysis. “So we’re not seeing a lot of cross-shopping or interaction occurring at this point. We’ll see. Out of the gate, we’re not seeing a big impact.”
Toyota officials dismiss criticism the truck may be priced too high, though Esmond says the auto maker may look to expand sales in the commercial side of the market by putting in vinyl seats and stripping out some content.
Tundra sales contributed to Toyota’s best-ever sales month in the U.S., delivering 242,765 cars and trucks, up 7.7% from like-2006.
Included in the tally were an all-time record 19,156 Prius hybrids, more than double year-ago. That was due in part to the reduction in tax incentives – from $1,575 to $782 – that took effect at the end of the month and pulled demand into March. Toyota also had incentives on the Prius, including 0% financing for 24 months.
Although that sales pace is expected to slow somewhat, Toyota still plans to sell 175,000 Priuses this year and says it currently has only a 20-day supply of the vehicle.
The auto maker says March marked a milestone for hybrid-electric vehicles, as Toyota sold its 500,000 (including Lexus models) since launching HEV sales in the U.S. in 2000.
The month also was a record March for passenger-car sales for Toyota overall.
The sell-down of outgoing Scion xBs and xAs continues, Esmond says, with only a 15-day supply in stock. The new xB hits the market May 7. There are less than 4,000 xA models in stock.