Facing pressure, Toyota cuts prices on pickups

By Jui Chakravorty

DETROIT (Reuters) - Toyota Motor Corp (7203.T) is cutting the price on upcoming versions of its Tundra pickup truck as it looks to build on an early success in cracking a highly competitive segment still dominated by the Detroit automakers.

The market for pickup trucks, which accounts for about 13 percent of overall U.S. auto sales, has become the most fiercely contested segment, as automakers sacrifice margins with expensive sales offers in order to protect market share.

Weak housing starts and high gas prices have been blamed for the pressure in the segment -- typically the most lucrative -- and Toyota spokesman Irv Miller expects the pressure to continue into the next year.

"We definitely expect an intensification of pressure in the segment ... you are going to have more competitors with new products, all fighting for the same piece of the pie," Miller said on Tuesday.

"Throw in the added turmoil of fuel prices and the question mark over the housing market and construction business ... we don't anticipate (the pressure) slowing down in the foreseeable future."

The Tundra is competing with General Motors Corp's (GM.N) GMC Sierra and Chevrolet Silverado, Ford Motor Co's (F.N) F-150 and Chrysler LLC's Dodge RAM pickups -- all of which have had heavy incentives over the past few months.

Toyota said on Tuesday it is expanding its Tundra full-size pickup truck lineup for 2008, adding 13 new model variations and offering previously optional equipment as standard items on the Double Cab and CrewMax -- for a price lower than a similarly equipped 2007 model.

The equipment includes a stereo with a 6-disc CD changer, heated mirrors and mud guards.

Toyota has increased its incentives on the Tundra pickups trucks by 10 percent to 15 percent compared with a year earlier, when the discounts were already hefty as the automaker tried to sell down the older version of the trucks.

"One other factor that has changed dramatically since September of '06 is that the full size pickup segment is facing much stronger head winds," Toyota spokesman Mike Michels said.

"Fuel prices have escalated a lot since then, the housing market and subprime meltdowns have also occurred, so all manufacturers are having to sweeten deals to get the buyers into their trucks."