Toyota: Great Product Versus Discounting

Product Greatness Not Category Determines Customer Sensitivity to Price

The car industry has been rife with discounting for years. We consumers have been conditioned to expect discounts on cars. Whole businesses have developed to exploit this conditioning behavior. But…

Toyota posts amazing sales growth in April 2012 without any discount programs. How is this possible? Circumstances and Product

Circumstances Help

Its always been the case in technology that timing is everything. Many have written about the fate of great concepts that bet on the wrong trend while others were too early to market.  These circumstances are plausible but whose timing is not entirely predictable. Gas prices certainly helps cement the desire for hybrid cars. But high cost of gas does not explain Toyota’s success because the prices of gas 1 year ago, are nearly identical today.

Great Product is Even More Important

Toyota has introduced new two lines of Priuses and Camry’s that have been their most successful launches in history while their incentives have dropped from a year ago.  To quote the New York Times:

Toyota “did this by the virtue of their products,” Mr. Toprak (an industry reacher) said. “They’re spending significantly less on incentives than Honda, and Honda hasn’t been able to recover as well.”

Even in an industry that is conditioned for discounts, customers want and will pay for higher quality product that delivers value.


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