Rentals boost Toyota sales

2012-02-15 07:57

DETROIT, Michigan - Toyota's strong start to 2012 in the US got a boost from rental car sales, a market it has long avoided there.

The company sold 47% more cars and trucks to US rental companies and other fleets in January compared with a year earlier. Without those corporate customers, US sales would have been up less than one percent instead of 7.5%.

The sharp increase in fleet sales is a big change for the Japanese automaker, which has long shied away from that market because it's less profitable than sales to individuals. Rental car sales in the US can hurt a brand's image and lower resale values. That's because they flood the market with units.

Toyota says the higher fleet sales won't be a long-term trend; the company is merely making up for contracts it couldn't fulfill in 2011 after Japan's earthquake-limited car production. However, the automaker is under pressure to perform better. Sales have fell through the previous two years because of safety recalls and earthquake-related shortages.

Toyota ended 2011 with a 12.9% share of the US car market, down from 17.9% in 2009. Even with fleets, the company's January sales increase of nearly 8% was less than the industry average - it gained 11% in the US.

Toyota's numbers don't show which vehicles went to rental companies but two aging models - the Yaris sub-compact and Avalon sedan - saw huge sales increases. That's often a sign that cars are being sold to fleets.

In a recent interview with The Associated Press, Toyota's US sales chief Bob Carter said the company sold few cars to fleets in the second half of 2011 because inventories were so low.


But that has changed since Toyota got its factories working and ramped up production following the earthquake. Carter said: "We said we would make it up to them when we were back up to 100%."

Toyota typically sells seven to eight percent of its vehicles to rental fleets; in January 2012 that rose to 18%. Carter said fleet sales would also be high in February before dropping to normal levels in March.

Spokesman Steven Curtis said the company expected to sell less than 10% of vehicles to fleets in 2012.

Toyota could also continue to boost its numbers with fleet sales. It relies far less on fleet than Detroit automakers. General Motors sold 28% of its cars and trucks to fleets in January, Ford 29%.

Toyota, to deter individual buyers from defecting to other brands, might offer more deals in coming months, some analysts predict. Toyota spent an average of $1921 on incentives in January, less than the industry average, according to auto shopping site TrueCar.com.

Toyota also plans to introduce 19 new or updated vehicles in 2012, including a new Prius and a battery version of the RAV4.