The rumors started a few weeks before the Tundra went on sale last month:
"Psst. Hey, Toyota is going to launch their brand new Tundra with incentives!"
It seemed ludicrous to think the most successful automaker on the planet, and one historically loathe to incentives, would be offering them on a brand new product even before the dust could settle on showroom models.
But as you probably already know, the rumors were true. The all-new, 2007 Toyota Tundra is currently being offered with cut-rate financing (3.9 to 5.9 percent), and during the month of February (the truck's first month on sale) Edmunds recorded an average incentive on each truck sold at $1,647. That same month Toyota sold 9,669 Tundras, while Chevrolet sold 17,420 Silverados. And here's the real interesting part: the average incentive on each Silverado was $1,529 -- yup, almost $120 lower per truck than the Tundra's cash back. Both trucks are all-new for 2007, so having incentives on either seems a bit crazy this early in the product cycle, but the bottom line can't be ignored: Chevrolet sold nearly twice as many all-new full-size trucks as Toyota with fewer incentives. Throw in the twinned GMC Sierra and the you get another 5,588 trucks in GM's sales bin, though the Sierra's average incentive for February was slightly higher than Tundra at $1,893 per truck.
For comparison's sake, the Ford F-150 had a $3,792 average incentive in February and the Blue Oval moved 33,542 trucks. Nissan's numbers were $3540 per truck and they moved 6,058 Titan's in February while Dodge gave back a whopping $5,655 per truck sold and cleared 15,632 Ram's from dealer lots.
Everyone knew the battle for America's truck dollars was going to get ugly once the Japanese stepped up, but I don't think anyone thought we'd see cash-back on brand new models this quickly.
By 1487
on March 16, 2007
07:49 AM
I think Toyota has invested so much in this new plant and hyped this 200k per year production figure so much that they will do whatever it takes to get Tundras off dealer lots. If they had planned for more modest sales #'s I dont think they would be doing this so early. Of course, its hard to sell a truck with no incerntives when ALL of the competition has cash on the hood. Especially when your truck is one of the most expensive out there.
By carlisimo
on March 16, 2007
09:07 AM
Very good points, 1487.
It's hard enough for an import company to sell full sized pickup trucks under normal conditions. With gas prices high, and the entire segment incentivised, it's going to be tough.
Unlike the car segment, the buyers Toyota is trying to conquest are happy with their current vehicles and won't see any long-term savings by switching (with cars they used to due to reliability, and still save due to resale). So at similar or higher price levels who's gonna switch?
By editor_karl
on March 16, 2007
09:12 AM
Excellent insight by both of you. Unlike the car markets, where the U.S. essentially walked away, the truck market is too important and the domestics (one would certainly hope) have learned their lesson.
This time it's going to be a major fight.
LLLLet's get ready to RUUUMMMBBBLLLEEE!!!!
By roar02ram
on March 16, 2007
09:17 AM
Plus I think Toyota was caught off-guard by the criticisms of the Tundra, to be quite honest. Edmunds has been the most kind to the truck, I think.
By editor_karl
on March 16, 2007
09:46 AM
Plus the pricing debacle hurt them. Toyota basically admitted to us that they screwed up on the pricing release. By only letting the trim pricing out first (without listing standard or optional equipment and associated pricing on that) the trucks looked vastly over-priced. Yes, they come with more standard equipment, but when you don't make that crystal clear after finally releasing pricing (which was done too late as well) you leave people with just enough information to think the trucks are expensive versus price-competitive (once you take standard equipment into account).
By skierx420
on March 16, 2007
10:23 AM
Ford, Dodge, and Nissan all have trucks that are in the middle or nearing the end of their product cycles. So they typically will have more cash out there than new product. I personally think that Toyota will have an impact outside the midwest where truckers are less loyal and they are used more like SUVs than realy pickups. In the midwest many truck buyers suffer from what I will call I've always bought a branditis. It will be tough for them to get inroads in rural America but the left and right coasts will see many of these trucks soon.
By flicmod
on March 16, 2007
10:42 AM
Relating this to the "Will Toyota Face a Backlash?" article, it proves that Toyota isn't infallible. Karl mentioned the pricing debacle with the Tundra. Everyone else said in the other blog that Toyota has some kind of miraculous PR and marketing departments. Nay, I say. And this proves it. Toyota seriously screwed up. Just further evidence that Toyota's run to #1 is higher on their priority list than running a decent company. It's gonna come back to haunt them sooner or later.
Oh, and good points so far everyone!
By savetheland
on March 16, 2007
04:06 PM
Don't see a problem here. Toyota overpriced its truck. Practice GM had just recently. Toyota takes gradual approach to solving problems. Sooner or later they will crack this market also just becuase ther are more consistent than Detroit automakers and they do not have UAW like it or not.
By rsholland
on March 16, 2007
05:12 PM
It's still way too early to declare winners and losers here. Toyota made some missteps with the launch, no argument there. They'll get past this I have no doubt. They're in this for the long haul, and you can bet they'll keep scratching and clawing until they get it right.
Ultimately the "product" will either succeed or fail based upon how good or bad it is. Everything I've read to date has been very positive about the Tundra. Eventually that word will filter out to the truck crowd—who work for a living and don't hang out on gearhead sites like this. Those are the folks that Toyota needs to get, and that will take time.
The success high-roof Dodge Sprinter is a good example of this. This is a vehicle that's clearly aimed at the "work truck" crowd, and not the weekend warriors who love their pickups. Now I might add, the advantages of the Sprinter may be much more obvious than the advantages of the Tundra, but even so it's a case of product defining success, not patriotic allegiances.
By hondacura4
on March 18, 2007
03:46 PM
If you cant beat them, join them! I wonder how much Toyota is offering off the price?
By 1487
on March 19, 2007
09:29 AM
The thing is Toyota needs to have Tundras flying off lots NOW if they hope to "crack" this market within the next 10 years and make headway against the sales leaders. People continue to say "wait and see, Toyota will takeover in due time" without acknowledging this is their 3rd try. Remember, 200k trucks isnt going to put them ahead of third place Dodge and they may not even get close to 200k without major incentives. The overpricing of the standard truck is beyond stupid because fleet buyers and contractors do NOT want to pay extra for tons of standard equipment. Toyota seems to be thinking they are above contractor and fleet sales and that is a mistake if you ask me. Every "good" sale doesn't have to be to a private owner.
rsholland,
I totally disagree that all the press on this truck has been great. Most reviews have been lukewarm but not super enthusiastic. Everyone likes the big engine but the rest of the package is just midpack. Toyota's commercials focus on the power and max towing capacity because that is where it has an advantage, its average otherwise. Toyota should've focused on a class leading interior and great fuel economy instead of trying make a truck that could outrun a 328i in a drag race. What truck owner needs a 6.1 0-60 sprint? With that kind of power its a good thing stability is standard.
By 1487
on March 19, 2007
09:34 AM
PS.
In regards to Toyota's "dominance" of the car market I think its important to remember Toyota doesnt sell more cars than GM. Having the best selling model doesn't equal "dominance" contrary to what the media would have you believe. Chevy sells as many midsize cars as Toyota and its just one GM brand. Unfortunately, DC and Ford haven't done a good job producing decent cars in the last decade or so and GM is virtually alone in the car segment battling Toyota and the rest. The fact that Ford/DC arent inept at making pickups means that Toyota is fighting three strong competitors in this segment which makes it MUCH tougher than the car segment.
By desmolicious
on March 19, 2007
05:51 PM
Weird that Toyota didn't learn from their Lexus Ls400 launch all those years ago. Then Toyota undercut their rivals on price by a large amount (leading some to speculate that they were initially losing money on them) to bring in the sales, establish market share and then they gradually raised prices and noone batted an eyelid.
Should have done the same with this truck to get it out there, with a new following not just preaching to the choir, so to speak.
By hondacura4
on March 27, 2007
05:56 PM
Toyota has to make up that extra $400,000,000 some how! Thats how much they exceeded the budget.