Toyota May Offer Longer Warranties, Cash-Back Deals
It's not yet clear what Toyota's huge recalls will cost it in lost sales. The company's U.S. vehicle sales declined 16% in January even though recalls weren't announced until the second half of the month. That means Toyota's sales could easily drop more than 20% in February and remain negative for some time while the balance of the U.S. car industry rebounds. If this happens, Toyota's 18% U.S. market share, which took decades to earn, could drop precipitously.
Toyota has earmarked $2 billion to cover the costs of its 8 million vehicle recall, which includes eight models that have accelerator problems. That figure doesn't include the expenses for the recall of its Prius hybrid sedan and Tacoma pickup truck models. If Toyota has to offer companywide 10-year warranties and substantial upfront incentives to bring customers back into its showrooms, that first $2 billion is going to seem cheap.