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Oct.03

9:57 AM ET

Friday, 3 Oct 2008

Toyota Finds The Going Tough At The Top

Posted By:Phil LeBeau

Sectors:Oil and Gas | Technology | Automobiles and Parts

Companies:Toyota Motor Corporation | General Motors Corp

This is for all of you who e-mail and call me "Toyota Phil" and for those of you who think I favor the Japanese automaker and never write anything critical.

And yes, even for those of you who have suggested I am part of a conspiracy in the media to only portray Toyota [TM Loading... () ]as the best in car business (Yes, I actually get e-mails stating this).

The Japanese automaker finds itself in an unusual position--explaining why its sales plunged 29% last month while promoting its cars and trucks with the type of 0% financing offer the Detroit three have been running (and criticized for) in recent years. In short, Toyota is getting a taste of the tricky life that comes when you are the second largest automaker in the U.S..

This doesn't mean the wheels are coming off at Toyota. It does mean the automaker is finding the challenges that come with being large are not strictly the problems of the Big 3.

Also, Toyota is finding GM's [GM Loading... () ] models have risen to a point that they can attract buyers, especially when sweetened with employee pricing. Just look at the success some of GM's models had last month while Toyota's bread and butter models struggled with far fewer incentives.

As a result Toyota has to fight fire with fire and bring the kind of offer that will get buyers back in the showrooms. Zero percent financing on 11 models will certainly help.

This is not a case of throwing cash out on some inferior models. This is simply greasing the deal a bit to help buyers feel good about buying. It's a smart and necessary move in this market.

Welcome to life at the top of the food chain.

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