Toyota Tundra Launch Worse Than Expected
Despite having the newest design, the most powerful engine, and being built by industry stalwart Toyota, the new Tundra vehicle launch has not lived up to expectations. While nearly every new Toyota product in the last five years has sold at a ridiculously fast clip when first launched, the new Tundra appears to be struggling, with nearly all dealers having multiple Tundras in stock.
In an unprecedented move, Toyota is offering both special financing and rebates on a new vehicle to boost sales. Toyota just announced it is providing dealers $1000 in bonus cash towards the value of any truck traded-in on the new Tundra. This brings the total available incentives on the new Tundra to $3000, depending upon model. Additionally, Toyota is offering the 3.9% interest rates to spark sales. What does this say about the success of the new Tundra?
Clearly, part of the problem is that Toyota has yet to release a significant quantity of the Crew Max version of the Tundra. This is a much anticipated model, and there will definitely be a boost in the sales rate when this truck becomes widely available. Another issue is that Toyota is currently releasing a large number of what would be considered “fleet” Tundra’s to it’s dealers. These trucks, while excellent, are considerably more than there domestic counterparts. In some cases the price difference is staggering — the Toyota can be as much as $5000 more than a GM or Ford. Understandably, the fleet version of these trucks has been selling very slowly. But too many overpriced fleet trucks isn’t the only reason the Tundra launch isn’t going so well.
Toyota’s ambitious sales goal of 200k units for 2007 is forcing them to acknowledge that some large discounts and rebates may be needed to reach this goal. Keep in mind that the best-ever sales volume for the previous model Tundra was 126,529 units in 2005 (2006 was just a couple thousand less) — meaning that the new Tundra must sell almost 60% better than ever before to meet Toyota’s volume goal.
What happened to Toyota concentrating on making a quality product and leaving the sales goals to someone else? As a consumer, sales volume has little to do with my decision to buy a truck (if it did, Ford would get my business after selling over 900k trucks in 2006). In fact, high sales volumes typically means lower resale value — more vehicles to choose from means lower demand, and thus lower prices. Rebates also mean lower resale value – for instance, I know that the resale value of a new 2007 Tundra dropped a $1000 when Toyota announced their most recent incentive.
Toyota’s Tundra volume goal probably has a lot to do with keeping manufacturing costs down and gaining market share, and while I realize there is probably a lot going on that I don’t know about or understand, I think that Toyota is behaving stupidly. By chasing such a large volume goal, they may have to offer more discounts and rebates. After all, how are they going to capture any fleet sales if the base model Tundra is thousands of dollars more than a Ford or GM product? As a Tundra customer, more discounts and rebates are a bad thing…Tundra owners want the new truck to be expensive. That way, they’re used Tundras will be worth more.
If you add up the facts, it’s clear that the new Tundra isn’t selling as well as hoped. Combine the news about new rebates and incentives with the quite announcement Toyota made a few months ago about delaying the production of the three-quarter ton Tundra (something that they really need to capture market share), and the writing is on the wall.
Of course, this could all change once the Crew Max is available in large numbers. Perhaps everyone is waiting to see the Crew Max before buying will finally purchase a new Tundra? I don’t think so, but only time will tell.
- 2000MY: 100,445 units
- 2001MY: 108,863 units
- 2002MY: 99,333 units
- 2003MY: 101,316 units
- 2004MY: 112,484 units
- 2005MY: 126,529 units
- 2006MY: 124,508 units
- 2007MY: 200,000 units ?!
Filed Under: Tundra News