To help counteract the effect of its extensive recalls and safety issues on sales, Toyota has been offering 0 percent financing for as long as 60 months on eight of its most popular models. A print and TV campaign features testimonials and details about the deals. Various other manufacturers are offering the same incentives—this promotion is neither surprising nor unheard of—but these are purely responses to the downturn.
In Toyota’s case, the question was whether consumer concerns over safety would outweigh their concerns over saving money. It seems not—Toyota has seen dramatic sales increases over the past few weeks. It’s not surprising to see money concerns winning out for consumers. After all, the chances of not being able to afford a payment seem far greater than the odds of getting an unsafe car. Problem is, this strategy is shortsighted and, as some analysts have noted, will ultimately hurt brand value. When consumers ultimately want to sell these cars, their value will be deflated since the market has been flooded with new Toyotas. Just ask Jeep, which put so many Cherokees on the streets that it ended up having to close a significant number of dealerships.