Toyota pushes 0% financing

The Japanese automaker is taking an unusually aggressive approach after a crushing September sales drop.

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By Peter Valdes-Dapena, senior writer

Toyota's aggressive financing incentive includes models like the Corolla.
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NEW YORK ( -- After posting its worst sales decline in 20 years, Toyota Motor Co. is offering an uncharacteristically splashy incentive offer. The automaker is offering 0% financing on eleven models nationwide.

"Not only do we have the inventory of today's sought after fuel-efficient models, but we have the capacity through Toyota Financial Services to finance or lease them," said Toyota Division General Manager Bob Carter in a statement.

The incentive plan, and the way in which Toyota (TM) is communicating about it, is unusually straightforward and aggressive for the Japan-based automaker.

"It's very, quote-unquote, domestic," said industry analyst Tom Libby of J.D. Power and Associates, comparing it to the approach usually taken by General Motors (GM, Fortune 500), Ford (F, Fortune 500) and Chrysler.

In September, Toyota suffered a 32% sales decline compared with the same month last year, the automaker's biggest sales decline since 1987.

Toyota rarely offers a nationwide incentive program, preferring targeted, locally-based incentive programs, said Toyota spokesman Wade Hoyt. The company has not offered 0% financing incentive nationwide since just after the 9-11 attacks in 2001, he said.

"Toyota is saying we're not gong to sit by and accept being down 30%," said Libby. "We're gong to take action"

Some of the vehicles on which the incentive is being offered are popular models that usually sell in high volumes, especially in the current auto market in which customers are extremely sensitive to fuel economy.

The financing deal, available to customers with good credit, is offered on the Toyota Corolla, Matrix and Camry cars and the Rav4 and Highlander car-based crossover SUVs. In September, sales of these models held up better than the company's overall sales, declining only about 25% in most cases.

The financing incentive is also being offered on most of Toyota's trucks and truck-based SUVs: The FJ Cruiser, 4Runner, Sequoia, Sienna, Tacoma and Tundra. These types of vehicles have been selling slowly in the face of relatively high gas prices. Toyota's overall pick-up sales, for instance, were down 47% in September, the company reported.

While pointing out that customers can also lease these vehicles, Toyota is playing up the relatively strong position of its U.S. financing arm, Toyota Motor Credit. Financing arms of the three major U.S.-based auto companies have tightened rules for financing auto loans and leases, according to various industry sources, while Chrysler Financial has stopped leasing cars altogether.

In a recent interview with, Toyota spokesman Xavier Dominicis credited conservative lending practices for Toyota Financial Services' strong position.

"Generally speaking our customers have higher credit scores and we don't deal in a lot of subprime," he said.

By offering 0% financing, Toyota is hoping to drive customers into Toyota dealerships by reminding customers that credit is still available, said Hoyt.

J.D. Power's Libby predicted that the incentive would help sales. "I think this will actually prove to be very effective for them," he said. To top of page

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