By Robert Farago
October 13, 2008 -
Toyota’s been pulling its punches in the U.S. market for years– to avoid the political backlash and lowered profits that a Chrysler, Ford and GM’s collapse would create. Surveying the damage left by a 32 percent drop in September sales, ToMoCo is now saying fuck that shit [paraphrasing]. “The ‘Saved by Zero’ ad campaign began Oct. 2,” Automotive News [sub] reports. “It promotes a 0 percent financing program on 11 vehicles. Dealers say Toyota will shell out at least $250 million this month to cover the cost of the subsidized loans and to fill the airwaves with commercials. Calling it ‘mind-boggling,’ one dealer who asked not to be named said he doesn’t believe Toyota has ever spent so much in a single month on incentives and advertising.’” [That's what passes for independent, authoritative sources these days.] As one of only two AAA-rated auto lenders (GE Capital is the other) left in the biz, Toyota Financial can do what its competition can’t. And even though U.S. consumer confidence has hit the skids, whatever’s left will soon be headed ToMoCo’s way. In other words, the Japanese automaker is about to eat the lunch AND dinner of the aforementioned domestics.
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POWERED
October 13th, 2008 at 8:40 am
$250M buys a lot of airtime: I can’t get “Saved by Zero” out of my head.
I still believe that consumer incentives cheapen the brand and hurt long term. GM never recovered from its post-9/11 0% campaign, and that was 7 years ago.
October 13th, 2008 at 8:48 am
Tora, Tora, Tora!!!
October 13th, 2008 at 8:53 am
It was only a question of time for Toyota to find the opportune moment to flex its muscles, pull the appropriate levers, and gain an advantage.
October 13th, 2008 at 8:56 am
Maybe Toyota’s movers and shakers have finally come to the same conclusion as those of us long affiliated with the domestics: The American auto buying public could not give a rip less about GM, Ford, et al. The very idea of any “fallout” over Japanese dominance in 2008 is patently absurd. Any “political backlash” would be limited to a couple of states’ legislators and hardly worth mentioning.
October 13th, 2008 at 9:08 am
Time for a Toyota death watch…
October 13th, 2008 at 10:10 am
If you fired everyone at Toyota and replaced them with everyone from GM, it would still take a lifetime to drive the company into the ground. It took GM 30-50 years to do it, and they went about it with an almost supernatural ability to pick the wrong thing to do.
Bit premature to start a Deathwatch. A lot of the criticism of Toyota is valid, but if you think Toyota is going to fall anytime soon b/c of some fairly minor quality issues & Scion, you’re full of it.
They could buy GM and Ford and Chrysler with their 2008 profits. The Big 3 are playing t-ball, Toyota is in the Majors.
October 13th, 2008 at 10:23 am
To wait until GM’s employee pricing program was completely finished — no, really, this time they mean it…probably(!), and then survey the daily — hourly, really — critical damage being thrust at all of the domestics on every front that matters to an automobile company, for Toyota to do this NOW, at this moment, in this reality, is as Art of War as business can get. If GM, Ford and Chrysler had a living will, it would be in probate right now.
October 13th, 2008 at 10:36 am
Obviously, I wasn’t all that serious. Actually, I’m sure Toyota will be fine. However, it looks like their North American business might be headed for some rough times. But of course that’s still just a minor pimple on Toyota’s giant corporate ass.
October 13th, 2008 at 10:46 am
I have to admit I visited a toyota dealer for the first time ever, and not because they have wonderful cars (a debatable point around here) but because of this financing deal. Oh, your accompanying picture is dynamite!
October 13th, 2008 at 10:55 am
Sorry Tom.
October 13th, 2008 at 11:08 am
$250 million in one month is a serious amount of marketing cash to be putting on the table. I wonder how agressive Toyota will be visa-vis the credit ratings of customers? There are an awful lot of once Detroit loyalists who can’t get a loan or lease from the 2.8 right now. Toyota can afford to take a measured amount of risk there.
Remember that Toyota’s policy is not to lay any of their direct employees off (contractors and sub-contractors be damned), so they need to get the metal moving again. Shades of the job bank, eh?
October 13th, 2008 at 11:32 am
The amount of money being spent really shows. We are being bombarded by the “Saved by Zero” ads here in PA. At least the song is not as annoying as most other car ad jingles are (at least to me).
I am annoyed however, by the exagerated suspension flex in the commercials shown by every Toyota model as they zing up to and around the giant zero. If cars really moved that much on their suspensions we’d all need dramamine when we drove.
October 13th, 2008 at 12:13 pm
@toxicroach
no need to be sorry…I should know by now that it’s difficult to spot irony on the Internets.
October 13th, 2008 at 1:04 pm
“and the quarterback is toast.”
Didn’t someone quote that one the other day? Seems to apply here.
Guess I may need to go look at the FJ. I like to pay cash, but I would also like to preserve my cash for the market at this point.
October 13th, 2008 at 2:37 pm
What are the terms of the 0%? Do you also get the normally available discounts in addition to the zero %?
October 13th, 2008 at 3:55 pm
0% for only 36 months (at least in Western Washington)
Chrysler did 0% for 72 months
October 13th, 2008 at 3:56 pm
What normally available discounts? Their website is crap, btw. I could hardly get a price, nevermind discount info.
I think the Tahoe may be the better deal at this point. They are going for about the same price.
October 13th, 2008 at 6:05 pm
SherbornSean: “$250M buys a lot of airtime”
Right. And doesn’t Toyota realize that they’ll be broadcasting those commercials to an audience that’s in a deep coma from watching Obama and McCain ads?
October 13th, 2008 at 7:18 pm
O% for 36 months ($27.78 per month per thousand borrowed) is hardly earth shattering considering GM did 0% for 60 back in 2001 ($16.67 per month per thousand borrowed) and recently 0% for 72 months (13.89 per month per thousand dollars borrowed)
So $20,000 GM car 10 percent down: $250/month for 72 months
$20,000 Toyota car 10 percent down: $500/month for 36 months
OR double the Payment, and Americans are payment shoppers (remember negative amoritization, option ARMS and the like)
And I am sure that is with stellar credit and many will take the 60 or 72 month terms.
My friend bought a Corolla with 75 month Southeast Toyota Finance credit !!! Crazyness.
A good website for checking Toyota’s current incentives, at least for the south east US is http://www.earlstewarttoyota.com and click on “current rebates and incentives.