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Toyota May Extend Zero Percent Financing

November 16, 2001

Toyota Motor Corp., Japan's No. 1 automaker, said Nov. 16 it is considering whether to continue its zero percent financing on purchases of three car models in the United States after the end of November.

Zero percent and low interest loans are at the heart of an industry price war as automakers scramble to win back U.S. consumer confidence in the wake of the Sept. 11 terrorist attacks.

Toyota President Fujio Cho made the announcement at a news conference when asked

how the company would respond to decisions by General Motors Corp. and Ford Motor Co. to extend their zero-interest financing deals to January.

"As to whether we should continue it a bit more, we haven't come to any final decision," Cho said. "We are still in the middle of considering whether to do it."

Toyota had announced earlier in November that it intended to end zero percent financing on three older vehicles -- its Tundra pickup truck, Corolla sedan and the Forerunner sports utility vehicle -- at the end of November.

The cheap financing deals have revitalized U.S. car sales, with October industry-wide sales hitting record numbers.

The deals, first offered by General Motors Corp. and the Ford Motor Co., have also been offered by other car makers such as the Chrysler side of DaimlerChrysler AG and Mitsubishi Motors Corp.

But analysts and car industry executives have warned that the zero percent interest loans, which are extremely expensive for the automakers, are hurting profitability and borrowing from next year's sales.

Toyota's U.S. sales jumped 28 percent year-on-year in October, better than a 24 percent industry-wide increase.

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