Toyota Increases Marketing Outlay

Toyota Motor (TM - Analyst Report) seems to be regaining consumer confidence in the U.S. at a fast pace. The company has rolled out a plan to spend $1 billion on a marketing campaign to boost its U.S. sales in the fourth quarter.

The marketing outlay is 30% to 40% higher than the company typically spends in any quarter. Besides the huge marketing campaign, Toyota will also expand its line of gas-electric hybrid models under the widely popular compact Prius. The company is also looking forward to offer hybrid models both larger and smaller than Prius.

Toyota has been battered financially by the economic crisis. The company posted its first annual loss (¥437 billion or $4.4 billion) since 1950 for the fiscal year ended March 2009. Further, management has recently projected net loss to worsen to ¥550 billion ($5.5 billion) for the fiscal year ending March 2010.

However, the recently ended Cash for Clunkers program strengthened the demand for Toyota’s fuel-efficient vehicles in the U.S. The program, launched by the U.S. Government in late July, allowed consumers to trade in their old gas-guzzling cars and trucks with a mileage of 18 miles per gallon or less for a value of up to $3,500–$4,500.

Toyota ruled the roost in the Clunkers program, featuring as many as 3 models among the top 10 buys under the program. These are the Toyota Corolla (ranked first), Toyota Camry (third) and Toyota Prius (seventh). In terms of market share, Toyota led with 19.4% of all Clunker sales. We continue to recommend the shares of Toyota as Neutral.

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