Toyota is rethinking the cost of its basic 2007 Tundra after boosting the incentives on the truck twice in its first two months on the market.
Toyota has become the world's most profitable automaker by driving sales without the use of incentives. So its need to offer $2,000 on a brand-new truck has raised the eyebrows of some industry analysts and has Toyota re-evaluating the truck.
"Unfortunately, we may have put a little too much content into it," Ernest Bastien, vice president of vehicle operations for Toyota Motor Sales USA, told The Detroit News this week.
The truck is loaded with standard features including stability control, side-curtain airbags, AM/FM/CD stereo and a locking rear differential. They give the truck a starting price of $22,290. The competitors' starting price is $2,000 to $4,000 less because some of those features aren't on their base models.
"You can't try to sell a customer a $22,000 truck when your competitor is selling it at $18,000 to $20,000 and they're offering $3,000 off," said Alex Rosten, an analyst with Edmunds' AutoObserver.com. "When they see this starting price, that's immediately going to turn them off. It's just too expensive."
Toyota's extra $1,000 incentive, which was announced Wednesday night, comes just days before automakers release their sales data for March. Trying to boost sales this close to the end of the month doesn't speak well for what Toyota's numbers might show, Rosten said. "They're not meeting their sales targets, and they probably won't for March," he said.
Toyota officials would not discuss sales but said they might reduce the number of standard features on the regular-cab Tundra if consumers don't respond to the incentives. "We're open to changing the options that we offer," said Denise Morrissey, spokeswoman for Toyota Motor Sales USA. "It's not that we're going to go back and redo the whole process. It's kind of a matter of taking it out to market and seeing what the consumer is interested in and what they want."
Toyota spent years trying to figure out what consumers wanted in their full-size pickups. The company touted the visits it made to ranches, farms, construction sites and logging camps, asking "true truckers" how they used their trucks and what features they wished they had.
But that may have been Toyota's problem, said Rebecca Lindland, analyst with Global Insight Inc. "It's the classic example where focus groups are going to lead you astray," Lindland said. "People are going to say what they want, but when it comes to putting their money on the table, they won't."
In an e-mail to media Wednesday night, Toyota officials said Tundra sales have been good throughout the nation, particularly in Texas and the Southeast. Of the 200,000 Tundras the company hopes to sell, 10 percent would be regular cabs, 60 percent double cabs and 30 percent would be the Indiana-built CrewMax, which hit dealerships this month.
The double cabs and CrewMax can cost north of $40,000 when fully loaded. But so can the trucks from General Motors Corp., Ford Motor Co. and Dodge, and those are the truckmakers' more profitable vehicles.
Rosten said Toyota would sell nothing but CrewMax if it could, but a large segment of the population wants a basic work truck that can tow and haul without all the frills. "Toyota miscalculated the appeal of the Toyota brand and all this content," Rosten said.
MySA.com: Business