Toyota, beset by massive recalls, announced Tuesday it is temporarily closing plants in Kentucky and Texas so dealers can sell vehicles already on their lots.
Toyota halted production of all its recalled models for a week in late January while it worked out a fix for sudden acceleration problems in eight of its most popular models. It also told dealers not to sell the affected models. That led to cars and trucks sitting idle on dealers' lots.
The storied Japanese car company has now decided to produce fewer vehicles until current inventory is reduced. The Texas plant makes the Tundra pickup truck and the Kentucky plant makes the Camry, Avalon and Venza models. The Texas plant will shut down for two weeks and the Kentucky plant for at least one day. Nearly 9,000 workers will be affected.
Meanwhile, Toyota says it will provide an update on Wednesday about its progress fixing problems with the 8.5 million recalled vehicles. Toyota says it also may offer discounts and longer warranties to bring in more customers.
On The Ground In Arizona
At Precision Toyota in Tucson, Ariz., general manager John Barrera says he doesn't need more incentives because sales this February are stronger than last February.
"They're still coming in," Barrera says. "And most of the customers that are coming in are loyal buyers, repeat buyers."
Ron Marks, a University of Arizona employee, is one of the buyers. He has owned Toyotas since the 1980s. Now he's looking at a 2010 Prius — one of the recalled models. He says he's not worried about safety or quality. "No, I mean cars are cars," Marks says. "Everyone has these problems. I have an Audi and I get a recall notice on the Audi every 18 months. So, no, I'm not concerned."
Other customers on Precision's lot include Scott Baker and Mary Ann Hesseldenz. The couple owns an interior design business and they're comparing the small SUV Toyota RAV4 with a Ford Escape, which they saw earlier. They've never owned a Toyota. But Baker says his friends recommend them. Baker also says the recalls are not a factor.
"I mean, one of the things we were saying is maybe we can get a good deal because everybody else is not acting the way we are," Baker says. "Maybe they're going to be more open to working with us."
Cash Incentives, Extended Warranties
Baker is hoping the recalls will make Toyota more willing to deal. This week at the National Automobile Dealers Association meeting in Florida, a Toyota official said the company is considering cash incentives and extended warranties. Those lures would reportedly be aimed at repeat customers. But Rebecca Lindland, an auto industry analyst for IHS Global Insight, says those customers may not be Toyota's problem.
"The people that are the most upset and discontent with the Toyota situation are those people that this is their first Toyota that they've ever bought," Lindland says.
IHS Global Insight is lowering its sales forecast for Toyota. Still, even with its recent problems, Lindland says she'd rather be selling Toyotas. She reminds people that domestic automakers have been struggling for decades, not months.
"Because, of course, those brands that GM and Chrysler owned had really had a terrible 10 years in particular, but they had been on the downward trend anyway," Lindland says.
Seizing Selling Opportunities
Ford and GM are trying to capitalize on Toyota's trouble — offering an extra $1,000 to anyone who trades in a Toyota. But down the block from the Toyota dealership in Tucson, James Newton, the general manager of Holmes Tuttle Ford Lincoln Mercury, says the incentive isn't having much of an effect.
"I think you would assume a lot of people would come in here with Toyotas wanting to get out of them," Newton says. "We haven't seen a lot of that at all."
So far, Toyota's true believers seem to be sticking with their brand. It could take many more missteps to shake that belief. So what did Baker and Hesseldenz decide to buy — their first Toyota, that RAV4, or the Ford Escape? The couple settled on the Toyota. For them, it was a better match.