Toyota considers wealth of incentives warranties

February 16, 2010 at 12:00a.m.

ORLANDO, Fla. (AP) — Toyota Motor Corp. may offer incentives or increase the length of its warranties as it tries to recover from an embarrassing string of safety-related recalls.

The company has not decided exactly what it will do after it gets past the recalls, which include more than 8 million vehicles worldwide, for sticky gas pedals, floor mats that can snag the accelerator and a software glitch in the brakes of its Prius gas-electric hybrid, said Group Vice President Bob Carter.

Carter told reporters at the National Automobile Dealers Association Convention in Orlando, Fla., that it is focused on repairing customer cars and restoring their faith in the brand, which has had a reputation for bulletproof reliability for years.

Toyota already is offering zero percent financing for 60 months in some of its regions, as well as cash to dealers to help sweeten deals, and Carter said the company may do an incentive campaign once it gets through the recalls.

“We’ll be very confident that we will give our dealers a very good competitive program,” said Don Esmond, Toyota’s senior vice president for automotive operations in the U.S.

Dealers, Carter said, have fixed more than 500,000 of the 2.3 million cars and trucks covered by the sticky gas pedal recall, and they are repairing about 50,000 cars every day.

He also said the company has only 13 reports of sticking pedals in the U.S. and Canada out of the 2.3 million cars and trucks involved in the pedal recall.

“This is a very, very, very rare occurrence,” he said. “Please help us put some perspective on what’s happening. Thirteen is too many; we’ve got to take care of this,” he said.

About 300 dealers met with Carter and Esmond on Monday to talk about their business. Several said afterward that customers have the mistaken impression they are not selling cars because of publicity about Toyota stopping sales of models in the pedal recall. Toyota suspended sales of some of the eight U.S.-made models covered by the recall until dealers could fix them.

But dealers are free to sell the cars once they are repaired.

Carter says 88,000 of the 112,000 recalled cars on dealer lots have been repaired. He said the dealers have made customer repairs first, but have fixed their own cars during hours when customers are not seeking repairs.

Some of the 1,452 Toyota and Lexus dealers nationwide initially were unhappy that Toyota began shipping newly designed accelerator pedals to factories after the recall was announced, leaving them with no parts to fix cars for worried customers. But the company soon came out with shims — small pieces of metal, each about the size of a postage stamp — to be inserted into the gas pedal mechanism to eliminate friction that was causing the pedal problems.

But dealers who spoke after meeting said they were happy with the speed at which Toyota has moved to ship parts and get the recall behind the automaker.

“Toyota is looking at everything to reassure the public that they are who we know them to be,” said George Albrecht Jr., who runs a dealership in suburban Boston.

Esmond said he apologized to dealers for the recalls.

“We’re a quality brand and we stumbled. It’s our fault,” he said. “We’ll correct it.”

Carter said Toyota sales so far in February are down, but industrywide sales in the U.S. are also struggling due in part to snowstorms on the East Coast. Toyota’s market share is holding steady, he said.

Industry analysts such as Kelley Blue Book have done research showing that Toyota sales will drop this month. The company’s research shows 27 percent of new car shoppers who were considering a Toyota before the recall are no longer considering the brand. Nearly half of the buyers who have defected from Toyota say they may never contemplate the brand again.

Ford, Chevrolet, Hyundai and Honda have made the biggest gains with those customers, Kelley Blue Book said.

John Krafcik, CEO of Hyundai Motor America, said Monday his company used to lose customers who had narrowed their purchase to Hyundai or Toyota, but he said people are now dropping Toyota from their shopping list.