Toyota Needs Discounts for Tundra Goal, Press Says

July 10 (Bloomberg) -- Toyota Motor Corp., the world's second-largest automaker, needs discounts on the Tundra truck to reach the goal of doubling its U.S. share for large pickups, the company's North American president said.

``Incentives for us are not strategic, they are tactical,'' Jim Press of Toyota Motor North America said in an interview in New York today. ``In the dealer-transaction price game, where the competitors really set the stage with their incentive activity, it drives us to the point where we recognize that incentives are part of this market.''

Toyota in June began discounts of as much as $3,500 on the 2007 Tundra, four months after the truck's release. The pickup's list prices range from $22,290 to $41,850. Edmunds.com estimates the average Tundra incentive was $5,083 last month, more than on General Motors Corp. or Ford Motor Co. large pickups.

The revamped Tundra, built in San Antonio, is bigger and more powerful than its predecessor and for the first time puts Toyota in direct competition with Ford's F-Series and GM's Chevrolet Silverado trucks. Tundra U.S. sales rose 44 percent to 82,840 in this year's first half, as the industrywide total for large pickups fell 3.1 percent.

The size of incentives on the Tundra is unusual for any new Toyota product, said John Casesa, managing partner of Casesa Strategic Advisors LLC in New York.

`Fighting Back Ferociously'

``To some extent they are really struggling with Tundra, and domestic companies are fighting back ferociously,'' Casesa said.

The average Tundra transaction price, or what customers actually pay including incentives, was $33,605 in June, according to Edmunds.com. The average was $29,657 for Ford's F-150s and $29,151 for GM's Silverado 1500s, the Santa Monica, California- based company said.

Gasoline prices that have stayed near $3 a gallon this year have slowed sales of the trucks, yet consumer demand for pickups won't fade in the long term, Press said.

``Fuel prices will not substantially change the dynamics and the size of the market, but they will require product attributes that respond more to the environment of higher gas prices or greenhouse-gas concerns or environmental needs,'' he said.

Toyota is selling ``about double the volume of the last- generation Tundra in terms of where we were last year, in a segment that's down,'' Press said. ``We're right on our target.''

The company needs to offer a competitive large truck to keep its U.S. buyers from shifting to other automakers, he said. ``Long term, it's a segment we really need to be in to continue to grow with our customers as they come into our product line.''

GM is the world's largest automaker by annual sales volume. Toyota beat GM by that measure in this year's first quarter.

The Toyota City, Japan-based company's American depositary receipts fell $1.22 to $125.71 at 4:01 p.m. in New York Stock Exchange composite trading. They have declined 6.4 percent this year

bloomberg.com

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