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Toyota may face a long, hard road back

The automaker's lack of dynamic products to compete with rivals' greatly improved vehicles is the company's biggest problem, analysts say. It plans to introduce seven new or refreshed cars this year.

February 09, 2011|By Jerry Hirsch, Los Angeles Times

That's why the automaker is starting to pile on the incentives, Sargent said. Although Toyota still discounts its vehicles less than other major car brands, the gap has shrunk significantly in recent years.

"In the past, people were willing to pay close to full price because they saw the value. Now Toyota is having trouble selling cars on their merits, so they have to bring the price down and make them more attractive in relation to competitors," Sargent said.

Just five years ago, Toyota had an average incentive per vehicle of $838. That average incentive almost doubled to $1,598 in 2009 and rose to $2,125 last year, according to auto information company

Incentives dropped back slightly in January, but Toyota launched a new round this month, offering no-interest loans and lower lease rates as well as cash back, depending on the region and the model.

Toyota also began offering two years of free maintenance to its customers.

Carter is upbeat about Toyota's prospects this year.

"Yes, it is a very competitive market. There are a lot of good entries out there, and that is good for the consumer. But we are well positioned," he said. "The economy is getting better, and we have a fantastic pipeline of new product about to enter the market."

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