Toyota Hits A Pothole at Daytona Beach

Toyota’s plans to win over NASCAR fans by entering the Daytona 500 race hit a pothole after race officials found what they believe to be an illegal fuel additive in one of the company's cars.

The controversy arose when NASCAR said a car in a team led by driver Michael Waltrip scheduled had an oxygenate in its fuel line as it prepared to run a preliminary round.

“We will have some further discussion with that team and decide what our relationship is going to be in the future,” Lee White, general manager of Toyota Racing Development, told the Associated Press. “We hold our people to a very high standard, and certainly we hope that

2007 Toyota Camry
2007 Toyota Camry

we’ve partners with the right people.”

Toyota's White was unavailable for comment but a top marketing official at the company said it’s business as usual.

“There’s no change whatsoever in our marketing efforts,” says Les Unger, National Motor Sports Manger for Toyota Motor Sales USA. “We’re extremely disappointed in what transpired, but we don’t view it as a setback to Toyota’s long-term investment in NASCAR. We have every confidence in world that Michael is going to move forward and do best he and his team can to put this behind them.”

NASCAR couldn't be reached for comment on the fuel issue.

There’s no charge that Waltrip or Toyota knew of the illegal oxygenate found in the fuel line, let alone approved its use. The substance would boost the fuel’s octane, making the engine run better and thus produce more horsepower.

Waltrip is still scheduled to compete in Sunday’s race, but he was docked 100 points in the standings. Four of Toyota’s eight cars qualified for the Daytona 500 and three will be driven by members of Waltrip’s team.

The fuel flap has become high-octane chatter for bloggers devoted to NASCAR, but Jayski's , one of the most widely-read blogs, was careful to note that the penalty was a “team issue and not a Toyota issue.”

The Drive To Pass Ford, GM

But even before the incident, Toyota’s calculated entry in the Daytona 500 for the first time, had raised a basic question: Will race car fans cheer or boo? The company had previously sponsored teams in Goody’s Dash series in 2000 and the Craftsman Truck Series in 2004, so it’s clearly not a strange sight on the track.

Marketing pros say Toyota wants to present itself as an American company, underscoring its assembly plants and thousands of employees in the U.S. But some fans may see Toyota as a foreigner invading what had been a sport limited to Ford and General Motors, and Chrysler, now owned by Germany's Daimler.

“Toyota is gaining a presence in an arena considered to have above average brand loyalty to automakers and advertisers,” says Efrain Levy, an equity analyst at Standard & Poor’s. “Toyota is no longer just an export machine to the U.S. – it has feet on the ground here. Sales have been strong on the East and West coasts, but weaker in the middle of the country. Entering NASCAR is an effort to achieve deeper market penetration in a region where they’ve been relatively weak.”

Toyota continued to gain market share in 2006, surpassing DaimlerChrysler as the No. 3 auto seller in the U.S. Toyota ended the year with a 15.4% share of the U.S. auto market, compared with DaimlerChrysler’s 13.3%. Toyota’s market share increased more than 2 percentage points, up from 13.3% as the end of 2005. Analysts say Toyota benefited from its reputation for quality and fuel efficiency.

Ford Motor held off Toyota to keep its position as the No. 2 automaker in 2006. However, Toyota’s sale surpassed Ford’s for the first time in July and again in November. Ford ended 2006 with a 16.4% share of the U.S. market and has forecast a 14% to 15% market share for the next several years. That almost certainly means that Toyota will pass Ford and grab the second spot this year or next. GM held 24.3% of the U.S. market last year. Moreover, Toyota is widely expected to become the world's leading automaker by unit sales sometime this year.

The U.S. auto market, long dominated by the Big Three, is becoming more like the European market where a range of companies slug it out for sales. This month, Toyota rolled out the Tundra, a full size pick-up truck. This shows that Toyota is serious about slicing into Detroit’s dominance in trucks.


Looking For New Customers

Analysts say NASCAR looks like a good fit for Toyota’s efforts to sell mid-priced cars and the Tundra pickup truck. NASCAR claims an audience of 75 million, representing about one third of the U.S. adult population. It says 53% of its fans are in the 18-to-44-age bracket coveted by advertisers. Forty-three percent earn $50,000 or more a year, 11% earn $100,00 or more while 33% earn less than $30,000. Its fans are 60% male and 40% female.

NASCAR claims the largest turnout for 17 of the top 20 sporting events in the nation and the No. 2 rated regular season sport on TV trailing only the NFL.

NASCAR also claims marketing muscle, noting that about 100 of the nation’s largest companies spent $6.6 billion in TV advertising in 2006. The races are televised weekly in about 150 countries around the world in about 30 languages.

The National Association for Stock Car Auto Racing is relentlessly upbeat about Toyota’s decision to race at Daytona Beach.

“It’s a good thing for Toyota to come into our sport and provide opportunities for new teams and grow the fan base,” says Kerry Tharp, a spokesman for NASCAR. “It will make Dodge, Ford and General Motors compete even harder.”


That’s the goal and NASCAR is probably right. In the long haul, Toyota’s rough start at Daytona Beach probably will be blogger fodder and little more.

Scott Reeves is a news editor at CNBC. He can be reached at