On Air Now

Upcoming Shows

Program Schedule »

Listen

Listen Live Now » 1450 AM Holland, MI

Weather

Current Conditions(Holland,MI 49422)

More Weather »
50° Feels Like: 50°
Wind: S 17 mph Past 24 hrs - Precip: 0”
Current Radar for Zip

Tonight

Mostly Cloudy/Wind 35°

Tomorrow

Mostly Cloudy 56°

Thurs Night

Cloudy 38°

Alerts

Rivals take aim at Toyota customers amid recall

By Soyoung Kim and Christiaan Hetzner

DETROIT/FRANKFURT (Reuters) - Toyota Motor Corp's <7203.T> largest rivals are declaring open season on the automaker at a time when the industry leader is seen as most vulnerable in its largest market.

Ford Motor Co <F.N> and Hyundai Motor Co <005380.KS> said on Friday they are rolling out incentives targeting Toyota customers, looking to win sales as Toyota is reeling from a suspension of sales of most of its line-up in the United States due to a massive safety recall.

The companies are following the lead of General Motors Co <GM.UL>, which on Wednesday began offering Toyota customers payouts of up to $1,000 or zero-percent financing for up to five years if they trade in a Toyota for a GM vehicle.

GM Chief Executive Ed Whitacre said the program was the first example of a "new, more aggressive' GM and said the reaction from its dealers has been good.

"We said we ought to be there for these people, so we will react quicker than GM is used to reacting, so we'll do something first, and get out there first," Whitacre told reporters in San Antonio, Texas.

Toyota this week suspended North American sales and production of eight models, including its best-selling Camry, due to faulty gas pedals, an unprecedented move that has damaged its once-sterling reputation for quality.

It has also widened a recall for sticky accelerator pedals to China and Europe as it races to find a way to fix the problem in consultation with U.S. safety regulators.

Volkswagen, which is jockeying with Toyota for the No. 1 position in global sales, is also considering increasing its U.S. advertising budget and launching incentives aimed at winning over Toyota drivers.

"Our salespeople in the United States will look at this situation very closely. It's a good time to convince customers to switch to Volkswagen," a company spokesman said.

One source familiar with the matter said Volkswagen wanted to target Toyota owners frustrated with the safety crisis. VW had 2 percent of the U.S. market in 2009, compared to 17 percent for Toyota.

Autoconomy.com analyst Erich Merkle estimated the recall could cost Toyota up to 1 percentage point of market share in the United States this year.

Meanwhile, Honda Motor Co <7267.T> said it does not plan any programs targeting Toyota customers.

"We will not react in a predatory way toward either Toyota or Toyota customers," Honda U.S. sales chief John Mendel said in a letter to dealers.

Honda stands to benefit most from Toyota's troubles since it is the brand Toyota customers most often consider, while Ford, Hyundai and Kia Motors Corp <000270.KS> are seen as the other major beneficiaries of Toyota's distress, Merkle said.

"This recall issue damages them because the whole foundation the company is based on -- quality, safety, reliability -- that is why people buy Toyota. And when you take that away, that is their key differentiator," Merkle said.

Like GM, Hyundai and Ford are offering $1,000 in incentives to customers trading in Toyota vehicles.

Long considered a cheaper alternative to Toyota and other Japanese automakers, Hyundai has been seen as catching up to Toyota on quality and was the only major automaker to increase sales in the battered U.S. market last year.

Ford, which ranks No.3 in U.S. auto sales behind GM and Toyota, is also extending its incentive program to Honda customers and increasing its spending on regional dealer advertising.

"We've upped our contribution to dealer advertising," Ford sales analyst George Pipas told reporters. "We upped the decibel level on the message."

Pipas said that despite the launch of the Toyota incentive, Ford's overall spending on discounts would not rise significantly in January. "It's not going to wiggle our overall incentive spending."

Pipas estimated Toyota's sales suspension would reduce industrywide sales by about 20,000 vehicles in January. More than 700,000 vehicles are expected to be sold in the month.

The big unknown is February. Sources briefed on the matter told Reuters that Toyota plans to resume sales of the eight affected models as soon as the third week of February.

But the target is ambitious because of the massive number of vehicles involved in the recall and the need to conclude a review by U.S. safety regulators, the sources said.

Toyota is recalling 2.3 million vehicles for sticky accelerator pedals and needs to fix another 100,000 or so on dealer lots. Along with an earlier safety action, it has recalled 5.6 million vehicles in the United States, including 2007-2010 Camry and 2009-2010 Corolla sedans, the two top-selling cars in the United States.

(Reporting by Soyoung Kim, additional reporting by Kevin Krolicki and Jim Forsyth and Christiaan Hetzner; Editing by Bernard Orr)

Comments