June 19, 2007 - 12:50 pm
DETROIT (Reuters) -- Toyota Motor Corp. has been focusing the marketing of its new, full-size pickup truck on powerful brakes and a brawny engine designed to tow massive payloads.
But the revamped Tundra also is towing some unusually heavy baggage for Toyota: deep discounts [3,500 dollar factory with a 5,500 dollar dealership incentives] at showrooms intended to sway truck buyers wavering in the face of a weak housing market and high gasoline prices.
U.S. sales for pickup trucks have surprised skeptics by holding relatively steady this year with Chrysler group and Ford Motor Co. forced to rely on steep sales incentives.
Analysts expect the pressure for such margin-eroding discounts to remain strong for the remainder of the year.
That trend was underscored by Toyota's announcement last week that it was offering buyers cash rebates of up to $3,500 or interest-free loans for five years on the Tundra.
"It really makes you start to wonder what's going to happen as we head into the summer and the fall," said Jeremy Anwyl, president of Edmunds Inc.
Toyota, which has been able to largely avoid such spending because of surging sales, said it was responding to competition in the U.S. truck market by cutting prices on the Tundra, a product it has called its most important vehicle launch ever.
Toyota's incentives on pickup trucks were more than three times its average incentives on other vehicles in May, according to industry data.
Sales of pickup trucks, which rely heavily on buyers in industries like construction, have declined 3.5 percent through May this year. But full-size pickups still account for 13.2 percent of the overall U.S. market, flat from a year ago.
Brian Johnson, an analyst with Lehman Research, attributed that resilience to the launch of several new models, including the Tundra, GM's strong-selling Silverado and the new Ford SuperDuty.
'SOME GOOD STABILITY'
U.S. sales of pickup trucks rose nearly 7 percent last month, boosted mainly by demand sparked by new product launches and aggressive incentives of more than $6,000 on some vehicles.
That included incentives of up to $6,755 on Chrysler's Dodge Ram pickup truck and $4,125 on Ford's market-leading F-150, analysts said.
"We had a good month," Global Insight analyst George Magliano said, referring to industry-wide truck sales results for May. "It seems we are getting some good stability."
The pickup truck segment has been watched closely in large part because it remains a major stronghold for the Detroit-based automakers, even as they have lost market share in other categories to Asian rivals.
The price of a well-equipped large pickup truck can range between $30,000 and $50,000, well above the average sale price of $29,000 for a new vehicle.
On a combined basis, General Motors, Ford and Chrysler Group control more than 90 percent of the U.S. full-size pickup market.
Ford's F-series trucks are the perennial best-sellers, followed by GM's Chevrolet Silverado trucks. Chrysler's Dodge Ram truck is its top-selling vehicle in the U.S. market.
The overall market for these vehicles is also expected to remain under pressure through the rest of the year, a number of analysts have said.
"It's going to be pretty tough run for Ford and Dodge," said Erich Merkle, director of forecasting at consulting firm IRN Inc.
Merkle said Chrysler would have to continue to compete most aggressively on pricing until the automaker's redesigned Ram pickup launches next summer.
Wednesday, June 20, 2007
Posted by The 'C' Team at 6:04 AM