Toyota Motor Corp <7203.T> will extend U.S. sales incentives in April as it recovers from a two-month sales dip linked to recalls and suspended sales.

Don Esmond, Toyota U.S. senior vice president, on Thursday said incentives will be extended beyond April 5, but he declined to divulge details.

As we do on a on monthly basis, we'll take a look at the current market, (and) what our competitors are (doing), said Esmond. We need a little bit of a kick-start to kind of get the market in our direction and we'll continue. We're not going to walk away from our customers.

On Wednesday, Toyota U.S. brand sales chief Bob Carter, speaking about sales incentives, said, Why would I change? I would have to have my head examined to change these programs.

Toyota's sales incentives, the most generous in the Japanese automaker's history, triggered a price war as every top manufacturer in the U.S. market rolled out new discounts.

Toyota's sales, which include its Lexus luxury and Scion youth-oriented brands, rose 41 percent in March versus a year ago.

Toyota will unveil the specifics of its April sales incentives early next week. Current incentives including zero-percent financing expire on Monday.

When Toyota announced its March sales incentives, executives said February sales were pressured because consumers waited for special deals expected in March. Esmond said that was a factor in boosting March sales, along with better weather in major U.S. Northeast and Mid-Atlantic markets, which helped sales for the industry in general.

There was growing pent-up demand with buyers looking for the right opportunity to return to showrooms, said Esmond. They responded to the industry offers in March and really turned out in droves. The marketing programs we talked about last month clearly had an impact.

Also, U.S. Congressional hearings into Toyota's safety recalls were over after early March.

TOYOTA NO. 2

Toyota March sales were up 87 percent against February.

Toyota's U.S. March sales were 186,863, making it No. 2 behind General Motors Co , which sold 188,546 vehicles. Ford Motor Co was third with 183,283 vehicles sold.

Industrywide, U.S. sales for March were 11.8 million vehicles on a seasonally adjusted annualized basis (SAAR), up from 9.7 million vehicles in March 2009.

But that's still way down from a five-year March average of 16.2 million vehicles sold on a SAAR basis from 2004-2008.

Toyota's sales fell 9 percent in February and 16 percent in January against 2009. In February, Toyota was the only major automaker to experience a sales decline. The declines were particularly striking because the U.S. economy and the auto industry were in their worst slump in decades in early 2009.

The two-month slump for Toyota came as the rest of the industry showed signs that a gradual recovery for 2010 was under way.

(Reporting by Bernie Woodall and David Bailey; editing by Carol Bishopric)

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