Toyota says Tundra making money despite discounting

[toyotafanfan]

http://www.reuters.com/article/tnBas...35111420070910

on why they dropped incentives:

Lentz, who was speaking on the sidelines of a Toyota briefing for investors, said Toyota had offered less generous discounts in August because stronger sales in June and July had drawn down inventory to less than 40 days supply of sales.

makes sense, also explain why sales dropped, a short supply constricts sales and often will send customers to other brands.


More on why they have rebates:

But he said Toyota was finding that over a third of Tundra buyers were turning up at showrooms with vehicles that are worth less than the amount still due on the loans used to finance them.
The average amount of that "negative equity" for Tundra buyers facing that problem is $3,600, he said.

Yup, applies to all truck sellers, you need rebates to get people out of negative equity.

On off make trade ins

But he also said the Tundra was winning over customers from U.S.-based automakers for a 40-percent "conquest rate," with half of those buyers trading in full-size pickups from GM, Ford and Chrysler LLC.

Fan

[Dana_15]

Originally Posted by toyotafanfan

makes sense, also explain why sales dropped, a short supply constricts sales and often will send customers to other brands.

Good post. Short supply makes some people wait for what they want. I'm not going to lie, last week I went to the Toyota dealer and the Tacomas outnumbered the Tundras litterally 10 to 1. And a few of the Tundras were stickered at over 45k. If I was in the market for a new Tundra, I'd wait.

[EchoHoLiK]

^^^ The 10 to 1 thing, do you mean the trucks coming into service, or the trucks available for sale in the showroom?

[Corona67]

Originally Posted by toyotafanfan

On off make trade ins:

Can I hear an "Ouch!" for the domestic makes?

If the new Tundra turns out as good as it appears, Detroit is really going to be hurting.

C

[Dana_15]

Originally Posted by EchoHoLiK

^^^ The 10 to 1 thing, do you mean the trucks coming into service, or the trucks available for sale in the showroom?

For sale. I may have exagerated about 10 to 1 but it seems there is a lower inventory of Tundras than Tacomas. I'll take the camera next time, there are rows of Tacomas (which could have used ones in there) and just a few Tundras, like Fan said low inventory.

[mhadden]

Originally Posted by dana_15

For sale. I may have exagerated about 10 to 1 but it seems there is a lower inventory of Tundras than Tacomas. I'll take the camera next time, there are rows of Tacomas (which could have used ones in there) and just a few Tundras, like Fan said low inventory.

It's the same at Kokomo Auto World and Team Toyota up by my house...incentives help sales...I haven't seen incentived on the Tacoma in quite some time...doesn't help thath they don't have that great of interest rates either. But with incentives, I always worry about lowering resale value (ie domestics).

[TRD VVTi]

Great information and post.

[Wolfman]

Originally Posted by dana_15

For sale. I may have exagerated about 10 to 1 but it seems there is a lower inventory of Tundras than Tacomas. I'll take the camera next time, there are rows of Tacomas (which could have used ones in there) and just a few Tundras, like Fan said low inventory.

our inventory definitely swings toward tacomas right now as we probably have about 60-70 tacomas and only 20-30 tundras. its also a slow production time as we are in the transition period from 07-08. Nor Cal region's inventory allocation has also been cut slightly for tundra and prius as other parts of the country are in more need for them.

[kdhspyder]

Originally Posted by Wolfman

our inventory definitely swings toward tacomas right now as we probably have about 60-70 tacomas and only 20-30 tundras. its also a slow production time as we are in the transition period from 07-08. Nor Cal region's inventory allocation has also been cut slightly for tundra and prius as other parts of the country are in more need for them.

We're running 2/1 Tundras/Tacos....120/60 at the moment....after several inbound shipments of Taco's.

[ryannel2003]

My local Toyota dealership has about 30 or 40 Tundra's and maybe 5 or 6 Tacoma. Tundra's range from base model single cab to CrewMax Limited. I can see alot of people test driving Tundra's because they always come by the GMC dealership I work at. As for the GMC's, there are about 50 or 60 '07's. Yeah they aren't selling.

[Giff]

Regarding equity, my '06 Tacoma is worth about $5K more than I owe on it, and I've only had it 18 months. This is based on Kelly Blue Book value.

Toyotas certainly do hold their value very well.

[Dana_15]

^^^According to KBB my Tundra is worth more than I paid foir it eight months ago!

[dsmnick]

This article is vague and fails to provide any detail on how they measure to determine it is making a profit (plus the lack of any actual figures). Factor in the $1.2 billion spent building the San Antonio plant and the Tundra won't be in the green for a long time. Are they even including development costs?

It sounds more like spin to justify buying market share with resale value-eroding incentives. That may be a harsh statement but $5000 incentives on any new vehicle is absurd, especially when the goal appears to be chasing market share. That is the kind of stuff that got the domestics in trouble in the past.

[mhadden]

Originally Posted by dsmnick

This article is vague and fails to provide any detail on how they measure to determine it is making a profit (plus the lack of any actual figures). Factor in the $1.2 billion spent building the San Antonio plant and the Tundra won't be in the green for a long time. Are they even including development costs?

It sounds more like spin to justify buying market share with resale value-eroding incentives. That may be a harsh statement but $5000 incentives on any new vehicle is absurd, especially when the goal appears to be chasing market share. That is the kind of stuff that got the domestics in trouble in the past.

Markup on vehicle is rediculous. Sell a vehicle below invoice and Toyota (or any other manufacturer for that matter) still makes money. Toyota makes more not having to pay BS union labor. You can't factor in the plant. It's not like that plant will be used to build ONLY Tundras. It'll be revamped to be able to produce other vehicles as well. Doesn't matter where they get the numbers....this was a stockholder release, and if I'm investing in Toyota, I'm damn happy they are still making money.

[engineer]

~19000 Tundra's sold per month, and 40% of those are conquest sales. . . . . That makes 7600 per month conquest sales. Of these 7600 conquest sales, only half are in the form of full sized trucks. So that makes 3800 Tundra sales per month coming from full size GMC, Chevrolet, Dodge, and Ford trucks. Split equally between these four makes, that's 950 trucks per month coming form any one of the domestic makes. . . . .hardly a blip on the full size truck market. . . .

To put this into perspective, Ford sells roughly 70,000 F-series trucks per month. . . . GM sells roughly 90,000 full sized trucks per month. Dodge sells roughly 32,000 Rams per month.


Don't get me wrong, I'm sure the domestics would like to have those extra 950 sales per month that the Tundra is taking, but it's not the impending disaster that some here would have you believe.

As to the incentives, here in Dallas, many dealerships have commercials stating $9,000 off V8 double cab Tundra’s. Those are likely the smaller V8, but $9,000 off a brand new truck in it's first year!!!!!!! Also, I frequent two auto complexes with nearly every make and model and there are plenty (like 30-40) Tundra's to choose from on those lots. Does Toyota dealer trade? I would think that if one dealership was having a hard time keeping a decent inventory of Tundra's in stock, he would be able to trade a dealership around here for their excess Tundra's.