Toyota Tundra Forum

Wall Street Journal: Discount On Newly Redesigned Tundra
Toyota Dealers Offer Discount
On Newly Redesigned Tundra

By NORIHIKO SHIROUZU
March 9, 2007 12:36 p.m.

Toyota Motor Corp. says some of its dealers are offering as much as a $1,500 discount on the basic work truck version of Toyota's newly redesigned Tundra truck, just barely one month after it went on sale. The discount for the Texas-built large truck reflects the intense competition in this lucrative segment, and the challenge Toyota faces in its effort to substantially expand its sales in a segment long dominated by Detroit brands.
The discount is a one-month, nationwide program that began this month and is described by Toyota as "another tool," to spur sales, in addition to relatively low APR and lease deals Toyota has already offered since the outset.
Brian Smith, corporate manager of truck operations at Toyota's U.S. sales unit in Torrance, Calif., said the program should help dealers be able to prod more basic work truck buyers who tend to be "either credit-challenged or battling with negative equity" with their existing vehicles to buy new Tundras.
"At this point in time we feel like many of our [basic-work-truck] buyers are facing those constraints" and need a further assistance to help them buy trucks, Mr. Smith said.
While the Tundra launch is still in its early stages, Toyota's top management in Japan is concerned about whether the company can meet a target of selling 200,000 new Tundras this year, according to senior Toyota executives who spoke on condition of anonymity.
Toyota has manufacturing capacity to build more than 300,000 Tundras between two plants in San Antonio, Texas, and Princeton, Indiana. Some company executives, one insider said, believe Toyota might have rushed too much to build up manufacturing capacity for the Tundra when rising gas prices and an uncertain U.S. economic outlook may continue to impact sales of big gas-guzzling vehicles.
Industry executives and analysts have cautioned that the uncertain housing market could weigh on demand of large pickups from contractors. Moreover, Toyota's new truck is launching just as General Motors Corp. is accelerating the launch of its popular Chevrolet Silverado and GMC Sierra pickups, which boast the best fuel efficiency in the large pickup segment. Ford Motor Co., the long time segment leader, and DaimlerChrysler AG's Dodge brand, are heavily promoting their rival trucks, with "Truck Month" promotions.
Despite the Toyota's decision to begin a new incentive program for the Tundra, Toyota's Mr. Smith insisted Tundra sales still "are right on track" at this point, even though he is still waiting for the CrewMax version of the Tundra to arrive in dealer showrooms later this month. Through last weekend, Mr. Smith said Toyota has sold about 8,500 new Tundra trucks.
Still, some Toyota dealers noted the single-cab version of the Tundra has not sold well as expected, even though consumers were snapping up the double-cab version. Toyota dealers said, among other factors, the Tundra regular cab was too loaded with features and was priced too high and thus has failed to become an attractive vehicle to plumbers, contractors and other price-conscious commercial truck buyers, the very buyers it has set out to dazzle.
In some regions, the dealers also said trade-ins they are receiving are mostly Toyotas. "We are trading in mainly Toyota trucks. Practically no domestics," one dealer in the Southeast region said.
Toyota's Mr. Smith insisted attracting commercial buyers and those previously loyal to domestic big-rig trucks from Detroit, "that's our goal long term. I don't think anybody had an expectation that in the first four weeks we have a completely different buyer makeup than our current Toyota [truck] customer base."
He said of about 8,500 people who bought new Tundras Toyota has sold since last month, about 30% of them did so by trading in domestic trucks. "We're pleased with the amount of domestic trades that are coming in on the Tundra. It's increasing every week."
Toyota's new program offers dealers on average three $250 "coupons" they can use per Tundra regular cab to entice the customer.
Toyota executives say a dealer could use as many as four coupons per sale to offer the customer as much as a $1,000 discount on the truck, but the total number of coupons they use per truck will have to be three on average at the end of the month. The coupons are not available for use with sales of the other versions of the truck: the four-door double cab and the high-end CrewMax. The cheapest, two -- door, V6-powereed Tundra regular cab starts at $22,290, compared to the starting prices for GM's redesigned Chevrolet Silverado and Ford's F-Series pickups at $17,860 and $18,275, respectively. Toyota expects the Tundra regular cab to generate 15% of the truck's overall sales.
Toyota Spokesman Bill Kwong said incentives will likely vary from dealer to dealer, and that Toyota distributors in different sales districts may or may not make incentives under the latest program available to consumers.
Taking advantage of the Toyota factory incentive program, Southeast Toyota, the independent distributor of Toyota vehicles for Florida, Georgia, Alabama, North Carolina, and South Carolina, began offering on March 2 $1,500 dealer cash on the 2007 Tundra regular cab by supplementing the program with its own money. Southeast Toyota also will kick back $350 per Tundra sold when a dealer in its region meets the sales target it set on the big truck. It wasn't clear immediately how other regions of Toyota's U.S. market were taking advantage of the program.
A spokesman at JM Family Enterprises Inc., which owns Southeast Toyota, declined to comment.
Write to Norihiko Shirouzu at norihiko.shirouzu@wsj.com4
URL for this article:
http://online.wsj.com/article/SB117344825020132192.html

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