Toyota discounts boost Tundra, rattle Detroit

Toyota Motor Corp. rattled Detroit-based automakers in June with generous discounts on its new Tundra pickup truck, but said on Tuesday it had no plans to compete on price in other areas of a weakening U.S. vehicle market.

This is not an indication of a change in strategy, said Jim Lentz, Toyota's North American sales chief.

Sales of the revamped Tundra more than doubled in June from a year earlier after Toyota offered rebates of up to $3,500 or interest-free loans for five years -- an unusual move for an automaker better known for fast growth and stubborn pricing.

Toyota has marketed the Tundra as a fully-capable work truck and has called the vehicle its most important product launch to date. Lentz said Toyota was trying remain competitive since so many existing truck owners owe more on their vehicles than they are worth at trade-in.

In a segment like the full-size trucks, the customer expects and in some cases needs incentives, he said.

The battle for the pickup truck segment has been watched closely because it remains a stronghold for struggling Detroit-based automakers.

On a combined basis, General Motors Corp., Ford Motor Co. and Chrysler Group control more than 90 percent of the U.S. full-size pickup truck market.

For the first six months of the year, Ford's F-Series pickup and the GM's Chevy Silverado remained the top two selling vehicles in the U.S. market, with combined sales more than eight times the Tundra's tally.

GM CONSIDERS ITS CARDS

But in a worrying sign for Detroit, Lentz said a third of new Tundra buyers had traded in a competing brand.

With Toyota selling more than 20,000 Tundra trucks in June, the automaker was also on track to achieve its goal of selling 200,000 Tundras annually.

GM, which saw its overall sales plunge 24 percent in June, said on Tuesday it was considering its pricing options in a truck segment already strewn with heavy discounts.

We're certainly looking at what we should do ... and what we think we have to do playing our hand going forward, GM's chief sales analyst Paul Ballew told reporters.

Ballew called Toyota's incentive offer on the Tundra was inconsistent with the Japanese car maker's overall pricing strategy. They certainly have behaved in a way that's beyond anything I can rationalize, he said.

Sales of GM's new Silverado pickup truck fell nearly 26 percent in June despite GM incentives that included interest-free loans for three years.

Chrysler Group on Tuesday, meanwhile, said it would offer zero-percent financing on all its vehicles, with $1,000 bonus cash on select vehicles through the end of July.

Chrysler already has discounts up to $6,000 on its Ram pickup trucks, sales of which fell 7 percent in June.

Ford also is offering interest-free loans and cash back on its F-Series trucks. Sales of that truck were flat in June.

Lentz said Toyota would evaluate its full-size pickup truck incentive program on a monthly basis and act accordingly.

With a bit of luck we can back off, but we will just see what happens in the market, he told reporters.