With Toyota in Trouble, Rivals Gain

With Toyota in Trouble, Rivals Gain
By NICK BUNKLEY
Copyright by The New York Times
Published: February 10, 2010
http://www.nytimes.com/2010/02/11/business/11toyota.html?ref=global-home


DETROIT — With Toyota stumbling as it recalls more than eight million vehicles for problems, its rivals are seeing a rare opportunity to take back some market share.

General Motors and the Ford Motor Company are continuing to offer discounts of up to $1,000 to people who trade in a Toyota this month. (Ford’s offer is good on other foreign brands, too.) But the companies are not widely advertising the deals.

For example, Mark Reuss, president of G.M.’s North American business, did not mention the discounts in an interview Wednesday with CNBC from the Chicago auto show, despite being asked repeatedly about how the Toyota recalls would affect G.M.

“We are going to treat people and our competitors as we would like to be treated,” he said. Executives at Honda and Volkswagen have criticized discounts aimed at Toyota owners. Analysts said that Honda in particular did not need to offer such deals because its models were a natural alternative to Toyota’s.

“Our dealers are independent, but we have asked them to please restrain any urges to try to take a predatory stance in this type of environment,” said a Honda spokesman, Chris Martin. “We would like them to follow our example and pursue sales based on the merits of the vehicles.”

Mr. Martin said it was too early to tell whether the company would gain sales from customers who wanted an alternative to Toyota or be hurt by consumers associating Toyota’s troubles with other Japanese automakers.

“I don’t think anything that causes consumers to distrust automakers is a good thing,” Mr. Martin added.

The Korean automaker Hyundai also is expected to pick up some market share from Toyota, whose sales fell 16 percent in January.

Hyundai, which is about to start selling a redesigned Sonata sedan that it hopes will challenge the best-selling Toyota Camry, matched the G.M. and Ford discounts, but only for a few days.

Richard Lipsey, the general manager of Van Hyundai near Dallas, said he chose not to advertise the offer.

“I don’t think I’m going to entice people who have been loyal to Toyota for years by trashing them, just because one thing went wrong,” Mr. Lipsey said. “I wouldn’t want someone doing that to my franchise.”

In Sunday’s Detroit Free Press, ads for at least 12 dealerships, including a Nissan store, highlighted discounts for people who own or lease Toyotas. Across the country, dealers say the offers are bringing in more customers.

“Trade in your Toyota here,” proclaims a banner at Super Ford-Lincoln-Mercury near Los Angeles. The dealership’s general manager, Adrian Fargeat Jr., said showroom traffic had risen 15 percent since Toyota suspended sales and production of eight models last month.

He said seven people had taken advantage of the deal so far, including a few who gave up models that were not being recalled.

“People sometimes don’t buy, but they’re curious,” Mr. Fargeat said. “People that haven’t driven Ford in a while, when they get in they say, ‘Wow, I didn’t know Ford was like this.’ ”

More than a quarter of shoppers who were considering a Toyota before the recalls no longer are, according to a survey released on Wednesday by Kelley Blue Book.

The survey, of 691 consumers who used the company’s Web site, said many of those consumers were now considering brands that were not on shopping lists before the recall, including Ford, Chevrolet, Hyundai and Honda.

“There’s been such a perception gap between Toyota and other brands that were in many cases unfair,” said James Bell, Kelley’s executive market analyst. “This situation has sort of put a chink in that armor. The 800-pound gorilla is maybe a 700-pound gorilla now.”

Toyota, of course, is trying to resolve its quality problems quickly. It faced another setback this week, however, with the addition of more than 400,000 Prius hybrids to the list of models being recalled.

At the Chicago auto show, an American sales executive with Toyota, Robert S. Carter, said Wednesday that dealers had repaired accelerator pedals on 220,000 vehicles since last week. About 50,000 are being fixed each day, he said.

Dealers have received the software upgrade that is needed for the 2010 Prius, Mr. Carter said, and Toyota will begin mailing letters with instructions for owners of those cars this week.