Used Car News

Toyota’s massive recall of its most popular models caused used-car sales to drop in February and created a new round of incentive wars.

Toyota introduced 0-percent financing at the start of March after company executives saw sales drop 9 percent in February.
That’s the latest incentive from the troubled manufacturer. Toyota .
European and domestic automakers followed suit in an attempt to lure Toyota buyers.
"Incentive spending went up last month for most major automakers as they tried to lure Toyota buyers to their brand," stated Jessica Caldwell, director of industry analysis for Edmunds.com. "Toyota needs to stay competitive in this area while rebuilding confidence in their vehicles.”
Early indications show the financing offer is having the desired effect. The number of visitors to Edmunds.com searching for Toyotas spiked after the promotion’s announcement.
Most analysts expected incentives to remain low because manufacturers’ inventories are lean following last year’s bankruptcies of General Motors and Chrysler, as well as a new pact with the U.A.W.
“The incentive to incentize isn’t as great as it once was,” said Tom Kontos, executive vice president of customer strategy and analytics.
But a combination of bad publicity and cheap money overweighed the tight inventory levels.
The bad news surrounding Toyota lowered both new- and used-car sales in February.
Used-car sales were down about 2 percent in February, mostly because of Toyota, according to CNW Marketing Research.
Toyota used sales tumbled 39 percent in the first few days after the recall announcement. That included both models included in the recall as well as those not affected.
Many independent dealers lacked the parts needed to address the recall issues. On the other hand, CNW said they had the ability to switch customers into other vehicles since used buyers tend to have less brand loyalty.
Toyota’s used sales ended the month down more than 10 percent, CNW reported.
Many casual observers consider Toyota’s slip surprising. But it really exposes some long developing problems.
One is the use of incentives. CNW president Art Spinella said Toyota has offered high incentives for years, just like its U.S. competition, but they’ve gone directly to the dealers.
That’s because Toyota never needed to generate floor traffic before.
The rarity of a public incentive from Toyota should boost shoppers, Spinella said. But most sales will pull ahead purchases, rather than create new buyers.
The other matter is Toyota’s quality perception. That started slipping since 2005, Spinella said, when it peaked at 9.28 on a 10-point scale used by CNW.
Toyota dipped below 9 in 2008 and has been sliding steadily since.