Toyota spends a lot for the new Toyota Tundra
The company has to strike a careful balance between generating excitement for its newly designed 2007 Toyota Tundra pickup and maintaining strong sales of the current model.
The current Toyota Tundra has been a record-setter for the company. Last year Toyota sold every Tundra it made: 126,529. It hopes to do the same if not better this year as current production levels aren’t expected to go down.
To do that, the company is spending millions of dollars on incentives and low interest rates to make sure consumers don’t forget the 2006 Tundra in anticipation of the model hitting dealer lots at the start of 2007.
"It’s a tough time when you have a new model that people are waiting to purchase in the coming months," said Jesse Toprak, director of pricing and market analysis for the automotive Web site www.edmunds.com.
A year ago, however, Toyota spent $2,911 on each Tundra sold. The year before that, in February 2004, it spent an average of $700 per Tundra.
"You see increasing rebates to clear out the old inventory," Toprak said. "In the last two years the incentive levels of the Tundra are picking up. It’s quite unusual for Toyota, considering as a manufacturer they spent $1,183 per vehicle."
"Current buyers want it," said Toby Hynes, president of Gulf States Toyota. "The other side of the coin is, it’s important for buyers to know where you’re going."
He said the pricing on the current Tundra makes it competitive with comparable models. And the low interest rate lets customers build equity quickly, he said. That equity will come in handy when they want to trade their 2006 Tundra for the new model.
Toyota had a rare sales dip in February. Sales of the Tundra were down 4.5 percent compared with February 2005. On top of that, sales of Toyota passenger cars were down 4.3 percent during the same period thanks in large part to a 14.2 percent dip in sales of the Camry.
The Camry is another model that is getting an update. But the new one is coming out in April, not 10 months from now like the new Toyota Tundra.
"That’s not surprising as people get a glimpse of the new one, they might wait," said Rebecca Lindland, auto industry analyst for the research firm Global Insight. "Again, it could be in anticipation or a changeover issue. People are getting more information, especially rabid Toyota buyers. They are going to be very aware."