Toyota Motor Corp. may maintain elevated U.S. discounts for months to draw buyers as the world's biggest carmaker battles to recover its reputation for quality, according to industry analysts who track pricing and incentives.
The company began offering no-interest loans and discount leases on most Toyota-brand models in early March, extending them this month. The incentives were worth $2,568 per vehicle last month, up $1,003 from a year earlier, according to Santa Monica, California-based Edmunds.com. Toyota hasn't said if the program will continue through May.
"With what we can gather today, they're going to have to continue this level of spending until 2011 models start to come in a meaningful way," said Jesse Toprak, vice president of industry trends at forecaster TrueCar.com in Santa Monica, California. "That could mean until about August."
The discounts fueled a 41 percent U.S. sales gain for Toyota last month, after recalls of more than 8 million autos globally for problems including unintended acceleration triggered declines earlier in the year. U.S. regulators said April 5 that Toyota "knowingly hid a dangerous defect" related to sticky gas pedals, and Consumer Reports on April 13 called the Lexus GX 460 sport-utility vehicle a "safety risk" because of its handling.
Toyota fell 0.5 percent to 3,690 yen as of 12:43 p.m. in Tokyo trading. The shares have lost 4.9 percent this year.
'Lexus Mess'
Earlier this month, Toyota looked to be putting "bad news from January and February behind it," said James Bell, executive market analyst for Kelley Blue Book, a vehicle pricing and data company in Irvine, California. "My sense is this Lexus mess is going to keep the incentives around for at least another month, if not longer, and you might also see them on Lexus."
Toyota can pare production quickly, so it isn't likely to experience the long-term incentive problems of Ford Motor Co. and the former General Motors Corp. earlier in the decade, he said.
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