Toyota Resorts to Zero-percent Financing After Sales Drop

(MoneyWatch)  Sales for one of the nation's biggest automakers fell an alarming 32.3 percent last month, including a 62-percent drop for its top-selling, midsize SUV. The company responded with zero-percent financing for 11 of its biggest-selling models.

Sounds like one of the Detroit 3 domestic automakers, right? Wrong, it was Toyota Motor Sales U.S.A. Inc. That was the biggest percentage drop in sales for Toyota's U.S. subsidiary since July 1987, said Don Esmond, senior vice president of automotive operations. "It's been some time, but we have been through markets like this before," Esmond said in an Oct. 1 conference call. The zero-percent deals from Toyota were announced on Oct. 3.

Esmond attributed the September sales disaster to the credit crisis, and a drop in consumer confidence.

Through August, Toyota had been hanging in there, slightly outperforming the rest of the market. People outside the auto industry may not realize it, but Toyota now handily outsells Ford and Chrysler, which makes it second only to General Motors in U.S. sales.

Including Toyota, Lexus and Scion brands, Toyota Motor's U.S. sales through August were down only 7.8 percent from the year-ago period, but the whole U.S. light-vehicle market was down 11.2 percent, according to AutoData. Toyota's September fall-off was so steep, Toyota Motor's U.S. sales now are down 10.4 percent, year to date after nine months.

That's time for drastic action, judging by Toyota's unprecedented move to zero-percent financing.

Year to date, with U.S. sales of about 1.8 million after nine months, Toyota's U.S. market share is still ahead, at 16.7 percent, versus 16.2 percent a year ago.

The Toyota models covered by the zero-percent offer include three cars: the Matrix, Corolla and Camry; and eight trucks, the RAV4, Highlander, FJ Cruiser, 4Runner, Sequoia, Sienna, Tacoma and Tundra.

Terms range from 36 to 60 months. The deals expire Nov. 3.