Toyota Leverages Their Immense Cash Reserves to Offer 0% Financing

By Brendan Moore

10.13.2008

While the rest of the retail auto industry is suffering under the current credit crunch, Toyota is spending a lot of money to push the message that Toyota Financial Services is ready to finance any customer that can get approved, and not only that, they’re willing to do it at 0% interest.

You may have seen the ads already on television that promise that Toyota has plenty of money to lend through their new promotion, “Saved By Zero”. For those of you old enough to remember it, a line of Saved By Zero, the 1980’s hit song by The Fixx plays softly in the background of the commercial’s voice-over.

This is the type of thing you can do as a company if you have a vast amount of cash reserves and your in-house finance company is still rated at AAA by the rating agencies. You can make good things happen even if the rest of the industry is ready to jump off a bridge.

And Toyota needs something good to happen, because last month they experienced a 31.2% drop in sales in September. Low consumer confidence, tightening of credit standards and lack of credit availability overall hurt Toyota just like it hurt the other manufacturers, so Toyota decided to do something about the credit component of that terrible trio, and roll out their financing program.

Toyota lists eleven vehicles eligible for 0 percent under the program. The eligible models are, in ascending order, the Matrix, Corolla, Camry, RAV4, Highlander, FJ Cruiser, 4Runner, Sequoia, Sienna, Tacoma and Tundra. The commercials will run nationwide, with an estimated $250 million allocated for various types of advertising media. Dealers are reminded to inform customers that Toyota Financial is also still leasing vehicles under good terms, unlike many auto finance units that have curtailed or completely halted vehicle leasing lately.

COPYRIGHT Autosavant – All Rights Reserved

Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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1 Comment

  1. And it also gives them the leverage to make an offer that Cerberus can’t refuse.

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