Recalls Leave New Car Buyers Wary About Switching to Toyota

Despite generous incentives and a massive media campaign to address concerns about quality, Toyota Motor (TM) is attracting fewer car owners who drive other brands, auto industry researcher said Thursday.

A larger percentage of Toyota's new car sales are now coming from buyers who trade in other Toyotas, the group said. Nearly half of all new cars sold at Toyota dealerships this year included a Toyota trade-in, said. Last year, the figure was 42%. Industry-wide, this year, 42% of trade-ins match the brand of the new vehicle being purchased.

Before Toyota's recall woes began in late January, many buyers who weren't sure which brand to choose considered Toyota a safe bet, said senior analyst Karl Brauer. "Now, many of those uncommitted buyers don't feel as confident in the Toyota brand and are turning elsewhere, but some Toyota loyalists are displaying as much confidence as ever," he said.

Of all brands, Ford Motor (F) traditionally has had the most customer loyalty. research indicates that 59% of Ford's new car sales typically include a Ford trade-in, the group said.

Earlier this month, Toyota reported June sales fell nearly 14% from May but rose 10.6% compared to June last year. Overall, new car sales were down 10% from May but up 15% from June 2009, said.

Quality problems have resulted in Toyota recalling some 10 million vehicles worldwide, primarily to address issues with unintended acceleration. The most recent of those came just this week, when Toyota recalled 270,000 luxury Lexus sedans, including 138,000 in the U.S., to fix faulty engine valve springs.

Toyota in recent months has undertaken several initiatives aimed at reducing future problems and addressing current ones. They include an announcement earlier this week that the world's largest automaker will increase product-development time to improve quality. On Thursday, Toyota said it plans to open seven additional field safety offices across North America to speed investigations into vehicle defects.