Wall Street Journal: Discount On Newly Redesigned Tundra

[StatCoder]

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

Lots of great objective and specific information here. The fact that discounting has already begun is making front-page national business news. I think it highlights Toyota's and the independent distributors willingness to immediately start discounting if they feel that they have set the price too high for the market. The same evaluation should be expected on the other configurations. It really helps to monitor monitor sales information!

Also, the coupon mechanism is interesting. I can guarantee you that I'll be one of ones who gets four coupons.

[TundraMaxxer]

I wondered about that starting price for the regular cabs. Buyers of work trucks and fleet vehicles shop price. My guess is back at the factories, they are down-trimming a lot of these with fewer added options so they can get that MSRP down to a more competitive level. I don't know if they can get it below the $20K mark, but they should be able to get close to that.

[rcouret]

Bohn Bros, WestBank Toyota Gretna, La. is offering 0% APR for 60 months on "every 2006 & 2007 Tundra", up to $25,000. Thats $4631 savings over
five years at a 6.9% APR.

[Texas Longhorn]

1,500 is STILL not enough dicount, imo.


Not enough if Toyota wants to compete with: Chevy, Ford, Dodge, etc..

[StatCoder]

Originally Posted by rcouret

Bohn Bros, WestBank Toyota Gretna, La. is offering 0% APR for 60 months on "every 2006 & 2007 Tundra", up to $25,000. Thats $4631 savings over
five years at a 6.9% APR.

South of New Orleans
(Actually, I'm sure it would be fine to drive over and pick one up )

[Cliffy1]

Originally Posted by rcouret

Bohn Bros, WestBank Toyota Gretna, La. is offering 0% APR for 60 months on "every 2006 & 2007 Tundra", up to $25,000. Thats $4631 savings over
five years at a 6.9% APR.

Every Tundra under $25,000 limits it to 2WD with the V6. Its a good hook to get people in the door.

[07Sport]

I dont see the price of the Toyotas being an issue. In my case at least, I am looking for a new truck, my have to haves are reg. cab, 2wd, i like the sport/colormatched look etc. The Dodge Ram I built was sticker price of $34515, the Tundra I built was $28665. Considering they were matched in every way pretty much, with a couple trade offs, why should Toyota discount? Even w/ the Dodges 5k rebates right now, they are still more than the msrp on the same equiped Tundra.

[TundraMaxxer]

Originally Posted by 07Sport

I dont see the price of the Toyotas being an issue. In my case at least, I am looking for a new truck, my have to haves are reg. cab, 2wd, i like the sport/colormatched look etc. The Dodge Ram I built was sticker price of $34515, the Tundra I built was $28665. Considering they were matched in every way pretty much, with a couple trade offs, why should Toyota discount? Even w/ the Dodges 5k rebates right now, they are still more than the msrp on the same equiped Tundra.

I think they were referring to basic regular cab trucks that are used in a no-frills way by contractors, plumbers and company fleets. In those cases, price isn't just an issue - it's everything. If you are buying 4 new trucks for your business, or 400 new trucks for your company - you will pay $19K for a Ford or Chevy before you'll pay $22K for a Toyota. These are not personal buying decisions, but rather budgetary decisions. In those cases, the "Toyota quality" argument fails to persuade.

[07Sport]

Oh, yeah, I thought they were refering to just price in general.

[StatCoder]

The fact is that discounting is happening a lot sooner than anyone expected - at least with regular cabs. One month after release? It's pretty stunning. That's what makes it front page business news. I'm sure that Toyota knows what it's doing and is doing so for a good reason.

There is naturally some spin regarding the reasons why this is only limited to the work truck market. You certainly don't want buyers in other segments to feel like they should or will be getting a discount soon. The next story will be that uncertainty in the stock market along with high gas prices is causing higher-end truck purchasers to delay their big purchases and to be more price conscious and order less options -> more coupons.

[rcouret]

Originally Posted by Cliffy1

Every Tundra under $25,000 limits it to 2WD with the V6. Its a good hook to get people in the door.

It's only limited to the amout they will finace. Not the price of the truck. You could put 10 grand down on a $35k truck and finace 25. Or you can trade in. Still a great deal for those who have the cash or trade.

[jqqd]

Go fast doesn't mean much to serious truck buyers. Toyota will need to do better on pricing across the board and even that will only attract a certain amount of sales. As mentioned in the article a majority of the sales are going to Toyota trade in deals. These types of sales will only keep the initial sales bump going for so long before it drops back. The competition is tough and GM has a very good truck to sell now.

[Cliffy1]

Originally Posted by rcouret

It's only limited to the amout they will finace. Not the price of the truck. You could put 10 grand down on a $35k truck and finace 25. Or you can trade in. Still a great deal for those who have the cash or trade.

Where is this advertised? I"m looking on their web site and they have the same thing we have:

2007 Tundra

3.9% APR for 36 Months
4.9% APR for 48 Months
5.9% APR for 60 Months
Or
Special Lease

All New 2007 Toyota Tundra Models

[Art64]

Originally Posted by StatCoder

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

Lots of great objective and specific information here. The fact that discounting has already begun is making front-page national business news. I think it highlights Toyota's and the independent distributors willingness to immediately start discounting if they feel that they have set the price too high for the market. The same evaluation should be expected on the other configurations. It really helps to monitor monitor sales information!

Also, the coupon mechanism is interesting. I can guarantee you that I'll be one of ones who gets four coupons.

This is a great article. And this is what I told the dealerships that I've been through that they should tell Toyota to start building and shipping their WORK TRUCK Tundras. There's already plenty of DC's with all the bells and whistles, and if they have a reg cab in the dealerships its a V6 or 4.7. One or two 5.7's with all the options that Toyota can put in it, driving the price way too high for a work truck. Get those work trucks out so workers can buy them and the more Tundras out in the road, the more it will sell as people will start to notice.

[MOREPOWER]

To date Ive seen more Tundras on the road than silverados and sierra combined, so if GM is selling an average of 27k per month where are they.