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The move is yet another sign that the world's second largest automaker has been severely hurt by the deep U.S. economic crisis, which has caused sales to slip to their lowest point since 1993.
"Toyota has always had some fairly extensive incentives but they have always been to dealers and not to consumers. Clearly, that hasn't worked this year," said Art Spinella, president of CNW Marketing Research, Inc. "The more Toyota becomes like General Motors, the more it has to rely on consumer incentives."
Toyota said its offer varies by model, with terms ranging from 36 to 60 months, and is set to expire Nov. 3. Toyota declined to say which models qualify the full five-year terms, saying the offers vary by region.
Separately, General Motors Corp. announced 0% financing for 36 to 72 months on dozens of models Wednesday with an offer that is also set to expire Nov. 3. Seven GM models qualify for six years, six qualify for five years, nine models qualify for four years and more than a dozen others qualify for a three year deal.
Toyota's 0% offer includes both 2008 and 2009 model years. The models that qualify are: Matrix, Corolla, Camry, RAV4, Highlander, FJ Cruiser, 4Runner, Sequoia, Sienna, Tacoma and Tundra.
"Overall, we don't anticipate becoming a manufacturer that is heavy in the incentive areas," said Toyota spokeswoman Zoe Zeigler. Instead, Zeigler said Toyota will continue to use incentives as a tactical option only when market conditions create a need, rather than a regular sales strategy.
But Spinella said that when both dealer and consumer incentives are evaluated, Toyota's total incentive expenditures have been creeping upward for several years.
Dealer incentives include incentives or bonuses to the sales staff and monthly volume incentives for the dealership. In August, Spinella said, Toyota's total incentives were $4,300 per vehicle compared with $4,600 for GM.
Still, Toyota has traditionally avoided deep, across the board consumer incentives. But in September, Toyota's sales dropped by an eye-popping 32.3%.
Toyota said the housing crisis and damage from Gulf Coast hurricanes hurt sales in many regions -- especially California, Florida and the Gulf states -- and said the financial crisis on Wall Street has spooked consumers and squelched showroom traffic during the second half of the month.
"It is certainly consumer confidence," Don Esmond, vice president of automotive operations for Toyota's U.S. sales arm, said during a sales conference call with journalists on Wednesday. "They've got their hand on their wallets and they are not using their disposable income."
Contact BRENT SNAVELY at 313-222-6512 or bsnavely@freepress.com.
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