Toyota 0% Financing - Article

[jake75]

Article doesn't specify the downpayment required or the loan term. 0% for a 36 month loan doesn't move too many people anymore as the payments are still pretty high. 0% for 60 months translates to $333/mo for a $20,000 loan. Assuming this 0% applies to the Matrix there ought to be pressure on GM to do something for the Vibe - perhaps increase the rebate if GM doesn't have the money to loan.--------------------------------------------------------------------------Oct. 3, 2008: Toyota appears to be rolling out its financing incentive plan across the U.S. with its eyes wide open.Can't get people into dealer showrooms since the banking world and economy came apart? Well, why not lure them in with 0% financing on 11 models on a nationwide basis?But like a pandering politician, Toyota must surely know that short-term gains could cause long-term pain in the form of diminished brand equity and credibility.The auto maker must be fully aware of the perils and pitfalls of quasi-giveaways: Mitsubishi Motors's well-chronicled disaster a few years ago and the Detroit Big Three's similar stumbles recently.The auto industry has repeatedly shot itself in the foot by encouraging a buy-buy mentality among Americans. Grabbing market share to the detriment of profit margins hasn't worked and that's because buyers become addicted to incentives. A brand's image can also be tarnished.But the move might juice up Toyota sales -- or more likely damp the declines -- provided that the Japanese auto maker handles the program prudently, withdrawing it as promised after a month and potentially reintroducing it in short bursts if other economic shocks jolt buyers into fearful hibernation.Toyota will require downpayments and regular monthly payments from the start. That's unlike Mitsubishi's infamous "zero-zero-zero" plan which didn't charge interest, demand a downpayment or require loan payments for the first six months or so.And what choice does Toyota have, really? "There's just no showroom traffic, especially in the last 10 days," one Toyota official laments. Usually, Toyota's incentive plans are more selective, taking a different tack across its 12 U.S. sub-regions. It's a sign of the times, perhaps, that the new campaign takes a blanket, nationwide approach.Hit by plunging sales -- down 32% last month -- amid the subprime fallout and a credit squeeze, Toyota says the 0% gambit is simply a stab at getting potential buyers into dealerships and showing them that both credit and fuel-efficient cars are available.Until now, Toyota's been relatively disciplined about sales incentives. Its September discounts -- although up 78% from a year ago at nearly $1,500 per vehicle -- were nonetheless about half the U.S. average and 37% of General Motors's, according to Edmunds.com.Toyota's U.S. finance arm has room to maneuver, with nearly $3 billion in cash and equivalents at the end of June.So far, so good.The worry is this: Toyota says there's no plan to extend the 0% plan past October but if buyers start to expect such deals, the auto maker may have to renew them -- repeatedly. That could come at the detriment of margins, which are already being squeezed by higher input costs and losses on the residual value of leased cars.

[jake75]

MORE: "The top Japanese automaker's U.S. division said Thursday in a news release that the incentives range from 36 to 60 months and are being offered on the Matrix, Corolla, Camry, RAV4, Highlander, FJ Cruiser, 4Runner, Sequoia, Sienna, Tacoma and Tundra."One dealer site I looked at seemd to say that the 0% did not include the base Matrix and was for a 36 month loan. They also mentioned a $1,500 loyaty rebate.