Toyota turmoil sparks price war, revs up car sales

By ROBERT SCHOENBERGER

Plain Dealer

Thanks mainly to a small price war launched by Toyota in the wake of its recall problems, auto sales have been going strong in March for most brands.

“The incentives have helped drive sales and consideration up, and we’ve been really busy,” said Ken Schneider, general manager of Metro Toyota.

Last week, dealers in Mahoning, Trumbull and Columbiana counties reported the lowest sales of new vehicles in some people’s memories. Dealers reported, however, that March got off to a strong start in the Mahoning Valley.

Two automotive research firms, Edmunds.com and J.D. Power & Associates, are projecting big increases in March sales industrywide.

Edmunds said cars are selling at a 13.2 million-vehicle annual rate this month, coming close to the 14.1 million rate seen at the peak of the federal Cash for Clunkers program last year. J.D. Power’s prediction for the month is an annual sales rate of 12.5 million vehicles, still one of the highest levels in the past 18 months.

Both companies said Toyota, reeling from bad publicity surrounding its recent recalls affecting more than 8.5 million vehicles worldwide, kicked off the sales increases by offering cash-back incentives and no-interest financing on many of its cars. Most of its competitors responded.

Though the incentives are modest compared with the automotive price wars of the first half of this decade, dealers say consumers have responded. Just how effective the promotions have been will be evident when the industry releases March sales figures late next week.

“You’ve got a bunch of people who’ve been putting off buying a car. You’ve got a lot of pent-up demand,” said Pat O’Brien, general manager of Pat O’Brien Chevrolet in Westlake.

Rich Klaben, president of the Klaben Auto Group, with stores in Kent and Warren, said dealers in Northeast Ohio generally expect a bump in sales in March after the Cleveland Auto Show. But he said the extra incentives from Ford, General Motors, Chrysler and Toyota have given people another reason to shop now.

“Buyers are still out there. They’re just looking for a reason to do business,” Klaben said.

In midsized cars, the most competitive segment of the industry, Ford, GM, Chrysler, Toyota, and Hyundai are all offering cash-back deals or no-interest loans for five years. Nissan is offering no-interest deals for three years. Honda has been the least generous — no cash-back offers and 0.9 percent financing for three years.

Michael Robinet, an analyst for research and consulting firm CSM Worldwide in suburban Detroit, said Honda had to offer something to keep people coming to its showrooms. But he said the company isn’t as desperate as Toyota, and he expects Honda’s sales to increase during the month, despite its lack of aggressive incentives.