In an unexpected turn of events, Toyota’s safety recalls could create a jump in hybrid sales. To counteract the effects of negative publicity, Toyota is offering a sale on the 2010 Prius: $249-a-month on a three-year lease. Some dealers are also increasing residual rates and dropping finance rates.
“The programs are very aggressive,” says Tom Rudnai, president of Longo Toyota in El Monte, Calif., the highest-volume Toyota dealership in the country. “We are seeing quite a bit of traffic,” Rudnai told the Wall Street Journal. He added that the recall is bringing hundreds of customers for service, providing an opportunity to speak to them about deals on their next vehicle.
Hybrid competitors, most notably Honda and Ford, are trying to take advantage of Toyota’s problems. According to Autodata Corp, Honda is discounting the Honda Insight to $219 per month on a no-money down lease. The Ford Fusion Hybrid continues to sponsor American Idol, which also features competing commercials, sometimes back-to-back, for the Fusion Hybrid, Toyota Prius and Honda Insight.
This level of marketing, and price incentives, is unprecedented for hybrids. In recent years, when gas prices were higher, dealers were charging premiums to hybrid buyers hoping to bypass long waiting lists to purchase a Prius.
Analysts expect Toyota’s overall maket share to slide by about 3 percentage points, and the company will take at least a $2 billion hit to its profits from the costs of repairs and loss of sales due to negative publicity.
Despite the recalls, and even before the hybrid deals, the Toyota Prius topped the list of new-car best values according to Consumer Reports‘ latest annual auto issue, announced yesterday. The 2010 CR issue has the Prius beating out more than 280 cars in eight categories—and nudging out the Honda Fit for the top position. While the Prius is more expensive than the Honda Fit—by about $10,000—and has a higher cost per mile, the Prius performed notably better in Consumer Reports‘ battery of road tests, earning a score of 80 versus the Fit’s 68. According to CR, both cars have excellent reliability.