Toyota discussing rebates, extended warranties to lure customers

Toyota Motor Corp. is considering longer warranties and cash discounts to woo U.S. consumers after recalls that forced the automaker to halt sales of eight models, dealer executives familiar with the talks said.

Ideas being considered include warranties of as long as 10 years and rebates of thousands of dollars per vehicle that would start in March, said three executives from retailer groups with Toyota franchises. They declined to be identified because the discussions are private.

"Toyota has got to be aggressive on this," Mike Maroone, chief operating officer of AutoNation Inc., the biggest U.S. retailer of the automaker's vehicles, said in an interview yesterday at an industry conference in Orlando, Florida. "Toyota has to put a wall around its customers."

Boosting incentives might help Toyota keep customers as it tries to recover from recalls linked to unwanted acceleration that included about 8 million vehicles worldwide. The Toyota City, Japan-based company's U.S. sales fell 16 percent in January while the industry total rose 6.3 percent.

Mike Michels, a spokesman at Toyota's U.S. sales unit in Torrance, California, wouldn't comment about any planned incentives. Maroone also declined to discuss details of the plan.

Toyota's American depositary receipts rose $1.05, or 1.4 percent, to $77.05 yesterday in New York Stock Exchange composite trading. The automaker has declined 8.4 percent this year.

In 1998 Hyundai Motor Co. offered an industry-leading 10-year warranty on the engine and transmission of its vehicles to neutralize consumer worries about durability. Hyundai said in 2006 it would continue the warranty at least through 2010.

The U.S. House Energy and Commerce Committee, headed by California Democrat Henry Waxman, is among three congressional panels that have scheduled hearings on Toyota's recalls and their handling by the Transportation Department. The hearings are scheduled for Feb. 24 through March 2.

Toyota won't offer a new warranty program until the hearings are complete, said one of the executives.