Toyota Woes Drag Detroit Back Into Incentive Wars
The biggest storyline right now for America’s bailed-out automakers is how little they’ve been able to capitalize on Toyota’s stumbles. While Ford and Hyundai made hefty sales gains last month, both GM and Chrysler’s performances were distinctly unimproved by Toyota’s woes. And now that Toyota is launching major incentive packages to recover lost sales momentum, Detroit has no remaining incentive to not revert to the bad old practices of incentive dependence. With GM and Ford diving into the zero-percent war, Global Insight’s George Magliano tells Automotive News [sub]:
Incentives are going to be here into the third quarter. We’re not going to wean consumers off incentives any time soon. We’re stuck with it. They’re all jockeying for position… After clunkers everybody backed off incentives. Now they’re going to the whip again
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I don't foresee Toyota dropping their prices much, as that doesn't seem to be their model. They're presumably cutting overhead, by closing NUMMI, and calling for various plant idlings as necessary. And Hyundai and Kia were on the lower end of the incentives scale as I recall. The Detroit 3 is on their own here, as usual. They're the ones with the overcapacity and inflexible overhead, so a price war hurts them the most. And Government Motors has shot their wad on the Toyota hysteria, so they can't really play that card again on the other transplants. The market will decide, and I can't foresee the market supporting any Government Motors IPOs in the near term.
GM's few vehicles that could take Toyota sales (Equinox/Terrain; Malibu, LaCrosse) are in short supply; they weren't positioned to take advantage. Ford is pushing aging platforms (yes, even the Fusion) that EcoBoost can't save. Chrysler -- meh. Toyota will win, again. But maybe they just played to the level of competition - with only Hyundai raising the bar.