Toyota on Monday said it could offer bigger sales incentives in the US market this year if a price war continued to escalate in the sluggish car market, Reuters reported.
“We expect overall car demand in the United States to exceed 16 million units this year but still fall well short of last year’s level (of 16.8 million),” Toyota president Fujio Cho told a news conference, according to Reuters.
“That inevitably means fiercer competition, and if the ‘Big Three’ step up their incentives, as they are widely expected to do, we will probably be forced to do the same,” Cho reportedly said.
Reuters noted that Japan’s top car makers have up to now been largely immune to the price war thanks to their reputation for building more attractive and reliable cars.
A top executive at Toyota last week told Reuters that the car maker had in fact spent $US200 less per car on incentives last year, while the local powerhouses had raised theirs.
According to Reuters, bigger spending on incentives will put pressure on Toyota’s profit margin, but the bigger damage would be to General Motors, Ford and DaimlerChrysler, which have been stepping up their discounts and other incentives to sell cars at the expense of profits.
Reuters noted that, thanks to strong sales despite a shrinking US market, Toyota last week reported record profits for a third straight year for the 12 months to March 31, turning in a 21% jump in operating profit to 1.36 trillion yen ($11.62 billion).
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