Toyota looks to offer longer warranties, big discounts

Toyota is considering longer warranties and cash discounts to woo United States consumers after recalls that forced the carmaker to halt sales of eight models.

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.

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

Incentives might help Toyota keep customers as it tries to recover from recalls linked to unwanted acceleration that included about eight million vehicles worldwide.

US sales fell 16 per cent last month while the industry total rose 6.3 per cent.

Toyota's American depositary receipts rose US$1.05, or 1.4 per cent, to US$77.05 in New York Stock Exchange composite trading on Friday. The car maker has declined 8.4 per cent this year.

In 1998 Hyundai offered an industry-leading 10-year warranty on the engine and transmission of its vehicles to reassure consumers about durability.

Hyundai said in 2006 it would continue the warranty at least until this year. The US 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 due to begin on February 24.

Toyota won't offer a new warranty programme until the hearings are complete, said one executive.

- BLOOMBERG