UPDATE 1-Rivals take aim at Toyota customers amid recall

* Ford, Hyundai offer $1,000 for Toyota trade-ins

* VW considers incentives, boosting U.S. advertising

* Automakers look to fill void left by Toyota recall

* Honda tells dealers not to be ‘predatory’
(Adds Honda letter to dealers)

By Soyoung Kim and Christiaan Hetzner

DETROIT/FRANKFURT, Jan 29 (BestGrowthStock) – Toyota Motor Corp’s
(7203.T: ) largest rivals are declaring open season on the
automaker at a time when the industry leader is seen as most
vulnerable in its largest market.

Ford Motor Co (F.N: ) and Hyundai Motor Co (005380.KS: ) said
on Friday they are rolling out incentives targeting Toyota
customers, looking to win sales as Toyota is reeling from a
suspension of sales of most of its line-up in the United States
due to a massive safety recall.

The companies are following the lead of General Motors Co
[GM.UL], which on Wednesday began offering Toyota customers
payouts of up to $1,000 or zero-percent financing for up to
five years if they trade in a Toyota for a GM vehicle.

GM Chief Executive Ed Whitacre said the program was the
first example of a “new, more aggressive’ GM and said the
reaction from its dealers has been good.

“We said we ought to be there for these people, so we will
react quicker than GM is used to reacting, so we’ll do
something first, and get out there first,” Whitacre told
reporters in San Antonio, Texas.

Toyota this week suspended North American sales and
production of eight models, including its best-selling Camry,
due to faulty gas pedals, an unprecedented move that has
damaged its once-sterling reputation for quality.

It has also widened a recall for sticky accelerator pedals
to China and Europe as it races to find a way to fix the
problem in consultation with U.S. safety regulators.

Volkswagen (VOWG_p.DE: ), which is jockeying with Toyota for
the No. 1 position in global sales, is also considering
increasing its U.S. advertising budget and launching incentives
aimed at winning over Toyota drivers.

“Our salespeople in the United States will look at this
situation very closely. It’s a good time to convince customers
to switch to Volkswagen,” a company spokesman said.

One source familiar with the matter said Volkswagen wanted
to target Toyota owners frustrated with the safety crisis. VW
had 2 percent of the U.S. market in 2009, compared to 17
percent for Toyota.

Autoconomy.com analyst Erich Merkle estimated the recall
could cost Toyota up to 1 percentage point of market share in
the United States this year.

Meanwhile, Honda Motor Co (7267.T: ) said it does not plan
any programs targeting Toyota customers.

“We will not react in a predatory way toward either Toyota
or Toyota customers,” Honda U.S. sales chief John Mendel said
in a letter to dealers.

Honda stands to benefit most from Toyota’s troubles since
it is the brand Toyota customers most often consider, while
Ford, Hyundai and Kia Motors Corp (000270.KS: ) are seen as the
other major beneficiaries of Toyota’s distress, Merkle said.

“This recall issue damages them because the whole
foundation the company is based on — quality, safety,
reliability — that is why people buy Toyota. And when you take
that away, that is their key differentiator,” Merkle said.

Like GM, Hyundai and Ford are offering $1,000 in incentives
to customers trading in Toyota vehicles.

Long considered a cheaper alternative to Toyota and other
Japanese automakers, Hyundai has been seen as catching up to
Toyota on quality and was the only major automaker to increase
sales in the battered U.S. market last year.

Ford, which ranks No.3 in U.S. auto sales behind GM and
Toyota, is also extending its incentive program to Honda
customers and increasing its spending on regional dealer
advertising.

“We’ve upped our contribution to dealer advertising,” Ford
sales analyst George Pipas told reporters. “We upped the
decibel level on the message.”

Pipas said that despite the launch of the Toyota incentive,
Ford’s overall spending on discounts would not rise
significantly in January. “It’s not going to wiggle our overall
incentive spending.”

Pipas estimated Toyota’s sales suspension would reduce
industrywide sales by about 20,000 vehicles in January. More
than 700,000 vehicles are expected to be sold in the month.

The big unknown is February. Sources briefed on the matter
told Reuters that Toyota plans to resume sales of the eight
affected models as soon as the third week of February.

But the target is ambitious because of the massive number
of vehicles involved in the recall and the need to conclude a
review by U.S. safety regulators, the sources said.
[ID:nN29227571]

Toyota is recalling 2.3 million vehicles for sticky
accelerator pedals and needs to fix another 100,000 or so on
dealer lots. Along with an earlier safety action, it has
recalled 5.6 million vehicles in the United States, including
2007-2010 Camry and 2009-2010 Corolla sedans, the two
top-selling cars in the United States.

Stock Basics

(Reporting by Soyoung Kim, additional reporting by Kevin
Krolicki and Jim Forsyth and Christiaan Hetzner; Editing by
Bernard Orr)

UPDATE 1-Rivals take aim at Toyota customers amid recall