Detroit/Washington: Toyota Motor Corp posted a second consecutive month of declining US sales on Tuesday as lawmakers pressed the automaker to account for the chain of decisions that led to its safety crisis and said they would consider new regulations in response.
Toyota’s US sales dropped almost 9% in February from an already-low level a year earlier in the depths of the economic crisis, but the fall was not as bad as some had feared and its shares jumped 3% in Tokyo trade.
To battle the decline in sales that began in January with a series of safety recalls, Toyota said it would attempt to win back consumers with discounts including zero-percent financing for five years on top-selling models like the Camry.
Meanwhile, the US Senate Commerce Committee concluded more than five hours of hearings on Toyota’s safety problems with another rebuke for the world’s top automaker.
Senator John Rockefeller, a Democrat from West Virginia who chairs the committee, said a trio of top Toyota executives appeared to be ducking specific questions about the decisions that led Toyota to safety problems that culminated in the recall of about 8.5 million vehicles globally.
“This has been useful but not as useful as it might have been,” Rockefeller told the Toyota representatives, including the automaker’s quality chief, Shinichi Sasaki, and its top engineer, Takeshi Uchiyamada. “I regret that because I know what kind of company you are and can be again.”
Analysts said Toyota’s February sales results were not as bad as some had feared, suggesting the automaker could begin to see a bounce back in its largest market as soon as this month.
Toyota shares jumped 3% in morning trade in Tokyo, outperforming peers such as Nissan Motor, which were weighed by the yen’s advance against the dollar.
“Toyota is down only 9%. With all of their troubles, it speaks highly of how positive their brand strength is among consumers,” said Jesse Toprak, analyst with Truecar.com.
Yoshihiko Tabei, chief analyst at Kazaka Securities in Tokyo, said he did not expect Toyota to suffer a sharp sales slide from March onwards in connection with the safety woes.
“I think its shares have already priced in negative factors and the bad news has pretty much run its course,” he said.
“Rather, my concern is the absence of government incentives and a higher yen, and they affect all (Japanese) carmakers, not just Toyota.”
Rockefeller, who was instrumental in helping to bring a Toyota engine plant to West Virginia in the mid-1990s, said reforms were needed to mandate brake override systems for all automakers.
Toyota has vowed to make the software available on all 2011 models as a safeguard that could prevent cases of sudden acceleration by shutting off acceleration in cases when the brake and the gas pedal are both engaged.
The automaker also has said it will offer the same safeguard on some models going back to 2005.
But Rockefeller suggested that Toyota should go further by offering brake override systems for all of its vehicles on US roads, a step that could add billions of dollars to the bill for its safety problems.
Earlier, Rockefeller had said Toyota documents examined by the Senate panel had included a warning from 2007 about the automaker’s growing problems with US safety regulators.
In an internal presentation, Jim Press, the president of Toyota’s North American operations, had warned that the company was facing more scrutiny from the National Highway Traffic Safety Administration.
“I’m deeply concerned this reputation was built on a house of cards,” Senator Frank Lautenberg told the commerce committee hearing regarding Toyota’s long-held reputation as a leader in quality and safety.
Toyota’s current North American chief Yoshi Inaba said the automaker would deliver the first three computers to NHTSA on Wednesday capable of reading data from crash recorders equipped on Toyota vehicles.
Until now, only Toyota has had a reader capable of extracting such data, a point that has drawn criticism from some lawmakers and lawyers for people injured in Toyota crashes.
Toyota declined to say how much its new sales incentives would cost, only saying that the promotion would include “unprecedented” offers on more than 80 percent of its line-up in the United States.
In addition to its financing incentives, Toyota will offer attractive leasing terms and free maintenance for two years for returning Toyota customers.
Barclays Capital analyst Brian Johnson said Toyota’s discounting raised the pressure on its rivals to offer their own competitive discounting.
“These expensive programs should represent a material step up in cost of incentives,” Johnson said in a note for clients.
He estimated that it would cost Toyota almost $4,700 per vehicle to offer zero-percent financing for five years, an effective discount that almost triples what the automaker had been spending on incentives.
Unintended acceleration in Toyota and Lexus vehicles has been linked to at least five US crash deaths since 2007.
Authorities are investigating 47 other crash deaths over the past decade linked to complaints of alleged unintended acceleration in Toyota vehicles.