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Toyota’s Drive to Win Back Customers


Toyota  (TM) had a rough year: The Japanese company is expected to lose its perch as the world’s number-one car seller, and it has  fallen to fourth place in brand perception, a new study shows. In response, analysts expect the automaker is roll out a new line of deals and discounts in 2012.

The car manufacturer said on Thursday that sales dropped this year due to now-resolved production problems, but will bounce back in 2012. The company estimates global sales will fall by 6% in calendar 2011 to 7.9 million vehicles, mainly due to manufacturing problems wrought by the natural disasters in Japan and Thailand. However, it sees global sales surging by 20% next year to 8.48 million vehicles.

Toyota will have a three-lane race with its nearest competitors – General Motors and Volkswagen – to win over American consumers next year, experts say. “Toyota will be producing and selling more units, but Volkswagen has steadily been growing globally,” says Joe Wiesenfelder, executive editor of Cars.com. “General Motors continues to debut new high-quality vehicles, with some high-volume models like the Malibu due next year.”

Toyota not only lost sales in 2011, it may also have lost some customer loyalty. “The competition is exceptionally strong, notably from domestic and Korean manufacturers,” Wiesenfelder says. “Americans have awakened to the fact that Toyota’s reputation, whether it was deserved or not, isn’t enough to recommend every one of their models without a second thought.” In 2011, 7.7% of Cars.com users searched for a Toyota. However, 16% searched for a new Ford and 8% for a Honda.

It’s ranked No. 4 behind Honda, Ford and BMW in a “brand health,” according to a poll carried out by market research company YouGov BrandIndex; the poll was based on 12 months of interviews among 3,400 prospective car buyers. “There’s still that lingering impact on the brand related to recalls in 2011 and 2010,” says Ted Marzilli, a senior vice-president and global managing director of YouGov BrandIndex.

The upside for consumers is Toyota has been quietly loosening its purse strings, analysts say. As SmartMoney.com previously reported, Toyota’s incentive per vehicle has risen 1.8% from January to November to $2,017, while the U.S. car industry has pulled back on incentives by more than 8% to $2,505 during the same period, according to data collected by TrueCar.com. And such deals are likely to get a further boost in 2012, analysts say. Bill Visnic, analyst and senior editor at Edmunds.com, says it must improve profits as well as sales, which may also mean fewer frills.

That said, Toyota U.S. spokesman Steve Curtis says the company’s market share in November was 14%, up 80 basis points from October. He says Camry sales were up 8% to 23,000 last month. Alec Gutierrez, senior market analyst at Kelley Blue Book. “They are generally pretty affordable at the moment.” He too says consumers can expect to get close to invoice price – that is the price the dealership pays for the car, which is typically less than the manufacturer’s suggested retail price.


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