When Toyota Motor Corp. set the pricing for its new Tundra pickup, skeptics said $22,290 seemed steep for the base model. Toyota managers countered that the truck didn't cost more than comparably equipped rivals but the critics had a point. Toyota is now offering dealers cash -- as much as $2,000 for a base two-door Tundra -- to help them sell the pickups amid reports of sluggish demand for the entry-level model. On the other hand, Toyota dealers report brisk sales of the four-door Tundra and strong orders for the top-of-the-line $41,850 CrewMax, with reclining second-row seats and a V-8 engine. "I'm selling double cabs, and I have almost 100 orders for CrewMaxes," which went on sale in mid-March, said Dianne Whitmire, director of fleet and Internet sales at Toyota of San Juan Capistrano in southern California but Whitmire has not sold a single two-door Tundra. "Those things are not selling," said Alex Rosten, an analyst at online auto research site Edmunds.com. "They're way too expensive."
Pickups from U.S. automakers -- Chevrolet Silverado, Dodge Ram and Ford F-150 -- start in the mid-teens, although more powerful and lavishly equipped versions cost more than twice as much.
Dealers say entry-level pickup buyers, such as gardeners and contractors, aren't looking for stability control, multiple airbags and other features that are standard on the base Tundra.
"They overestimated what the market will bear," Whitmire said. "What they need to do with this vehicle is to de-content it."
Toyota executives say they are reviewing the two-door truck's pricing and equipment levels. "Unfortunately, we may have put a little too much content in it," said Ernest Bastien, vice-president of vehicle operations at Toyota Motor Sales in Torrance, Calif. He said demand was weakest in southern states with warm climates, where customers tend to buy rear-wheel-drive versions. That segment of the pickup market is, "even for us, particularly price-sensitive," Bastien said. "I think there is a little bit of learning going on here." He noted, however, that the two-door Tundra was expected to generate only about 10 percent of total Tundra sales.
The Japanese automaker has invested heavily in the new truck in an effort to double its share of the full-size pickup market dominated by Detroit automakers. Domestic brands accounted for 90 percent of the 2.2 million full-size pickups sold last year in the United States. The new Tundra's arrival has heightened competition in the segment, pushing all automakers to jack up incentives.
This month, General Motors Corp. began offering zero-percent financing on its new trucks, which were well received by the market when they came out last fall. According to Edmunds.com's latest estimates, incentives average $1,529 per vehicle on the Silverado and $1,893 on the GMC Sierra pickup, while Toyota was offering an average $1,647 on the Tundra. Ford's discounts are roughly twice as high, with $3,792 for the F-150 and $5,655 on the aging Dodge Ram.
Auto analysts and executives say the rising incentives also reflect higher gas prices, which dented demand last year for big pickups -- one of the most lucrative segments in the market.
