Toyota Motor is considering increased incentives and an extended warranty program to combat consumer concerns about a deepening product safety crisis, a source briefed on still-developing plans has said on Sunday.
Toyota, reeling from its largest recall in history, is discussing a range of options with its US dealers to support sales, including US$1,000 in addition to the current $1,000 in cash incentives to returning Toyota customers, the source told Reuters.
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Toyota’s current $1,000 in “loyalty” bonus matches incentives offered by General Motors, Ford, Chrysler and Hyundai Motor to lure Toyota customers, the report noted.
Other options Toyota is considering include a free maintenance programme – such as oil changes and regular mile services – and a new warranty programme that at least matches Hyundai’s market-leading 10-year, 100,000-mile powertrain warranty, the source said.
Toyota currently offers a five-year powertrain warranty, or 60,000 miles, according to the report. It also offers a three-year basic coverage warranty for “all components other than normal wear and maintenance items.”
Toyota spokeswoman Celeste Migliore told Reuters the company reviews many options to remain competitive for each month, but declined to comment on details.
Don Esmond, senior vice president of Toyota Motor Sales, had earlier told the news agency in an interview that Toyota would consider “competitive incentives” to attract consumers and take steps to reinforce the brand.
Toyota’s US sales dropped 16% in January to the lowest level in more than a decade, after it suspended sales of top-selling vehicles subject to safety recalls, including the Camry and Corolla sedans.
AutoNation CEO Mike Jackson said at the weekend that, by April, Toyota’s sales would return to near-normal levels. Jackson said that for the full year, Toyota’s US market share would drop 1 percentage point, from 17% in 2009.
AutoNation handles about 3% of Toyota’s US sales and is the biggest dealer group in the country. About 20% of its overall sales are Toyota vehicles.
Esmond said Toyota had met with its dealer advertising committee this to come up with ideas to bring in more customers.
“We’re going to need something to reinforce the brand. I think we’ll look at anything and everything,” he told Reuters. “We are going to provide the appropriate incentives.”
The automaker will also pay for the inventory financing costs its dealers have suffered during the suspension of sales, Esmond said.
