Toyota boosts US sales with rental cars

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By DEE-ANN DURBIN and TOM KRISHER, Associated Press

DETROIT (AP) — Toyota's strong start to 2012 got a boost from rental-car sales, a market it has long avoided.

The company sold 47 percent more cars and trucks to U.S. rental companies and other fleets in January, compared with a year earlier. Without those corporate customers, U.S. sales would have been up less than 1 percent instead of 7.5 percent.

The sharp increase in fleet sales is a big change for the Japanese automaker, which has long shied away from that market because it's less profitable than sales to individuals. Rental-car sales, in particular, can hurt a brand's image and lower resale values. That's because they flood the market with models. Ninety-three percent of Toyota's January fleet sales went to rental-car companies. The rest went to corporate customers.

Toyota says the higher fleet sales won't be a long-term trend. It says it's making up for contracts it couldn't fulfill last year after Japan's earthquake limited car production.

But the carmaker is under pressure to perform better. Sales have fallen the past two years because of safety recalls and earthquake-related shortages. Toyota ended 2011 with a 12.9 percent share of the U.S. car market, down from 17.9 percent in 2009. And even with fleet, the company's January sales increase of nearly 8 percent lagged the overall industry, which gained 11 percent in the U.S.

Toyota's numbers don't show which vehicles went to rental companies, but two aging models — the Toyota Yaris subcompact and Toyota Avalon sedan — saw huge sales increases. That's often a sign that cars are being sold to fleets.

In a recent interview with The Associated Press, Toyota Motor Corp.'s U.S. sales chief Bob Carter said the company sold few cars to fleets in the second half of 2011 because inventories were so low.

But that has changed since Toyota got its factories working and ramped up production following the earthquake.

"We said we would make it up to them when we were back up to 100 percent," Carter said.

Toyota typically sells 7 to 8 percent of its vehicles to rental fleets, but in January that rose to 18 percent.

Carter said fleet sales also will be high this month, but will drop to more normal levels in March. The company expects to sell less than 10 percent of vehicles to fleets in 2012, spokesman Steven Curtis said. Toyota's chief rival, Honda Motor Co., sells few cars to fleets.

Toyota could also continue to boost its numbers with fleet sales. It relies far less on fleet than Detroit automakers. General Motors Co. sold 28 percent of its cars and trucks to fleets in January, while 29 percent of Ford Motor Co.'s sales went to fleets.

To keep individual buyers from defecting to other brands, the company might offer more deals this spring, some analysts predict. Toyota spent at average of $1,921 on incentives in January, which was lower than the industry average, according to auto shopping site TrueCar.com.

Toyota also plans to introduce 19 new or updated vehicles this year, including a new Prius and an electric version of the RAV4 small SUV.

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