Incentives Grow as Production Shrinks
There's a couple of new data points to consider as we near the end of the year and Toyota's efforts to meet its stated business goal of 200,000 Tundra full size pickups sold in the first year of production. Especially in light of the softening market for full size pickups. Sales in the segment are down over 8% in 2007 from 2006.
Through November, Toyota sold 177,336 Tundras - that's up a huge 57.7% over last year's numbers. But for Toyota to sell another 22,664 Tundra to close the gap to 200K sales, it's going to require an aggressive round of incentives.
Automotive News is quoting Toyota's General Manager, Bob Carter, who says, "The full-sized pickup segment has fought an economic headwind. We still expect to sell 200,000 Tundras this year. It's going to be close."
December's incentives include: 0-percent financing for 60 months or cash rebates up to $3,000 on 2007 model year Tundras, and 0-percent financing for 36 months or cash rebates up to $2,000 on new 2008 pickups.
But that's not the only money Toyota has been spending to move Tundra metal. Marketing and promotion costs appear to have grown substantially, from their original $100M budget to launch the new truck - the biggest introduction in Toyota's history.
Brand Week is reporting that Toyota has spent, "$1,404 on measured media for every Tundra sold and its ad spending was nearly $250M for the first nine months of the year."
Wow! Now that's a lot of gravy!
But while the incentives and marketing costs for the Tundra grow, production levels are shrinking.
According to the Financial Times, Toyota is preparing for the soft full size truck market by cutting back production of the Tundra at its factories in Texas and Indiana.
In November the company reduced the number of Tundra's built to 18,300 units - a 29 per cent drop from October (25,723 units) and almost a quarter below the August-October average.
This follows similar announced moves by General Motors and Chrysler for their full size trucks, but within Toyota's car and truck lineup, Tundra production fell disproportionately when compared to Tacoma and Camry. Those two products have seen production levels cut back by about 12%.
Toyota is still bullish on the Tundra. Last year they used the Super Bowl to launch the truck, with two 30-second spots that cost over $2M apiece. There will be another 30-second spot during the 2008 game to hype the Tundra for the coming year.