February 16, 2010 in Business

Toyota looks at incentives

Recall-plagued automaker may extend warranties to lure buyers
Tom Krisher Associated Press
File Associated Press photo

Toyota Group Vice President Bob Carter, shown in Chicago last week, said that the company is committed to restoring customers’ faith in the brand.
(Full-size photo)

ORLANDO, Fla. – Toyota Motor Corp. may offer incentives or increase the length of its warranties as it tries to recover from an embarrassing string of safety-related recalls.

The company has not decided exactly what it will do after it gets past the recalls, which include more than 8 million vehicles worldwide, for sticky gas pedals, floor mats that can snag the accelerator and a software glitch in the brakes of its Prius gas-electric hybrid, said Toyota Group Vice President Bob Carter.

Carter told reporters at the National Automobile Dealers Association Convention in Orlando, Fla., that it is focused on repairing customer cars and restoring their faith in the brand, which has had a reputation for bulletproof reliability for years.

Toyota is offering zero percent financing for 60 months in some of its regions, as well as cash to dealers to help sweeten deals, and Carter said the company may do an incentive campaign once it gets through the recalls.

“We’ll be very confident that we will give our dealers a very good competitive program,” said Don Esmond, Toyota’s senior vice president for automotive operations in the U.S.

Dealers, Carter said, have fixed more than 500,000 of the 2.3 million cars and trucks covered by the sticky gas pedal recall, and they are repairing about 50,000 cars every day.

He also said the company has only 13 reports of sticking pedals in the U.S. and Canada out of the 2.3 million cars and trucks involved in the pedal recall.

“This is a very, very, very rare occurrence,” he said. “Please help us put some perspective on what’s happening. Thirteen is too many, we’ve got to take care of this,” he said.

About 300 dealers met with Carter and Esmond on Tuesday to talk about their business. Several said afterward that customers have the mistaken impression they are not selling cars because of publicity about Toyota stopping sales of models in the pedal recall. Toyota suspended sales of some of the eight U.S.-made models covered by the recall until dealers could fix them.

But dealers are free to sell the cars once they are repaired. Carter said 88,000 of the 112,000 recalled cars on dealer lots have been repaired. He said the dealers have made customer repairs first, but have fixed their own cars during hours when customers are not seeking repairs.

Carter said Toyota sales so far in February are down, but industry-wide sales in the U.S. are struggling due in part to snowstorms on the East Coast.

Industry analysts such as Kelley Blue Book have done research showing that Toyota sales will drop this month. The company’s research shows 27 percent of new car shoppers who were considering a Toyota before the recall are no longer considering the brand. Nearly half of the buyers who have defected from Toyota say they may never contemplate the brand again.

Ford, Chevrolet, Hyundai and Honda have made the biggest gains with those customers, Kelley Blue Book said.

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