What does Toyota’s 0% offer really mean?

Trouble for Toyota?

I’m confused. I thought the economic downturn meant the end of easy credit and low financing as a sales incentive.

Yet here’s Toyota doing the unprecedented: a nationwide offer of 0% financing. We’re not talking just on V8 trucks and SUVs either, but on 11 of Toyota’s best selling, fuel efficient models including Camry, Corolla and Matrix.

Toyota is hoping to the high heavens that this action causes you to forget about the economy and gets you excited about a new Toyota. After all, excitement can cause your emotions to take over and before you know it, you’ve got new car smell seeping into your garage.

To me though, the fact that Toyota is even making this offer is a major red flag. Granted, it’s a show of strength in Toyota’s traditionally conservative financing arm, but they wouldn’t be making this offer unless they were hurting, and big time. A check of their September 2008 sales confirms it: a decrease of 32% from a year ago. Yup, that’s reason to panic!

Interest-free financing sounds great in TV ads and is an effective buying tool for some people. Seriously though, if you can’t afford a car at 6% interest, you can’t afford one at 0%; especially when the offer’s terms only stretch 36 months.

That’s when you get home and wonder if that wonderful scent of a new Corolla is worth $600 per month.

Toyota wants you to believe that everything’s fine, but the business of selling cars is changing and this latest incentive is only another piece of evidence to support that claim.

I want your opinion about this: will you consider taking Toyota up on their offer?

-tgriffith

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