Esmond says, Toyota may extend discounts past March

by SOHAIB: Toyota Motor Corp. may keep aggressive discounts available for U.S. consumers beyond this month after unprecedented incentives lifted U.S. sales in early March.

Toyota's U.S. sales surged 40 percent in the first 10 days of March compared with the year-earlier period in the wake of a zero-percent financing offer and other incentives, Don Esmond, senior vice president of Toyota Motor Sales U.S.A., said in an interview.

Esmond said Toyota would evaluate March sales results and reaction from dealers and consumers before deciding whether to extend the discounts, which the company called its most "far-reaching sales program in history."

"We'll continue to keep the dealers competitive in the marketplace," Esmond said, speaking to Reuters by telephone after meeting with the company's dealers in Cleveland.

"I think we will have to take a look at results and reevaluate, but the promise I made to dealers was that we will continue to make them competitive," he said.

Esmond said Toyota expects to regain most of its U.S. market share lost in the past two months following a damaging series of recalls that have tarnished its reputation for quality.

Toyota's U.S. market share plunged to 13.4 percent in the first two months of this year, down from 17 percent for all of 2009.

Standing by

"Toyota owners have stood by us,” Esmond said. “They've got good confidence in the brand and the products."

"For us, it's a pretty big step up, but still if you look at what the competitors spend per vehicle basis, we are still 30 percent below our competitors," he said.

As recently as February, Toyota's incentive spending averaged $1,833 per vehicle, compared with $3,434 per vehicle on average for GM, according to industry tracking firm Edmunds.com.

Toyota, which has traditionally spurned steep discounts in order to protect resale values, is offering zero-percent financing for five years on top-selling models, including the Camry, and free maintenance for two years to win back U.S. consumers after a series of product safety problems.

Gregg Lemos-Stein, an auto analyst with Standard & Poor's, said such deep discounts would appeal to people who remain undecided about the brand and to whom the price was a major impediment to buying Toyotas, but it has the risk of cutting into profit margins as well as resale values longer term.

"The reason why it's key," Lamos-Stein said of residual values, "is that, traditionally, Toyota has had an advantage on leasing and financing its new vehicles based on strong resale values."