Toyota may maintain elevated U.S. discounts for months to draw buyers

Article by Christian A., on August 25, 2010

Toyota Motor Corp. is expected to continue to offer high US discounts for a few more months to attract sales as it aims to gain back its reputation for producing high-quality vehicles, says analysts who follow pricing and incentives. In early March, Toyota began offering no-interest loans and discount leases on nearly all Toyota-brand models but before they expired, the carmaker opted to extend them until this month.

Edmunds noted that the recent incentives are worth $2,568 per vehicle, a rise of $1,003 from a year earlier. Toyota has yet to confirm if it will extend this program further until May.

But Jesse Toprak, vice president of industry trends at forecaster TrueCar thinks that Toyota would have to persist with this level of spending until 2011 models "start to come in a meaningful way." Because of this, Toprak believes that Toyota would offer these incentives until August.

The recalls of over 8 million vehicles that Toyota had imposed since late last year have resulted to sales declines but the discounts have led to a 41% US sales increase last month.

On April 5, US regulators concluded that Toyota "knowingly hid a dangerous defect" related to sticky gas pedals. Last Tuesday, Consumer Reports issued a warning about the Lexus GX 460 SUV, which it called a "safety risk" because of its handling.

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