Toyota to cut prices on Corolla and Yaris

The former class leaders have been overtaken this year in showrooms and Toyota has responded with a major value push on the compact contenders, including rare - for Brand T - price cuts.

The basic Corolla is down by $250 and the Yaris by more than $500 in a price push that cuts some models by as much as $910 and - thanks to extra equipment including airbags - boosts buyer value by up to $2400.

The move is expected to trigger a series of price cuts and value improvements as major brands jockey for sales. Nissan has already promised to deliver a new baby price fighter, its $12,990 Micra, next month and Holden has a new $12,490 Barina Spark ready to go in a double-edged attack at the bottom of the business.

The small-car action at Toyota comes during a rash of value updates that even includes a $1000 cut on the family-sized Kluger and more standard equipment in the HiLux ute. But Toyota denies any panic in the Corolla-Yaris move. "I'd rather not call it a price cut. It is definitely a value boost," says Dave Buttner, head of sales and marketing for Toyota Australia.

"Those two products are very important to us. They are just on 65 per cent of our passenger-car private sales. We need to ensure we offer value against our competitors."

Buttner is unwilling to name the Korean rivals but admits the Corolla has been overtaken by the pacy Mazda3, which is driving the Japanese brand to new highs in Australia. "With both Yaris and Corolla, while many of their products are at the peak of their model cycle, we are in the mid to later phase. We took the opportunity of some technical changes to go for a value upgrade," he says.

"At the same time, we've re-postioned our prices. With spec up and price down, these vehicles will continue to represent great value."

Even so, Buttner admits times are tough."There is no denying it. These two products were number one but their share has eroded through 2010 and they are now number two. We believe the products still have a wonderful reputation and should be leading."

The value drive comes with the help of Toyota in Japan and means the Yaris now starts at $14,990 and the Corolla at $20,990. The basic Ascent gets full-length curtain and driver's knee airbags as well as rear power windows.

Despite Toyota's domination of Australian showroom action, Buttner is not expecting a significant response from the company's rivals. "I don't expect a price war. From a pricing point of view, this puts us in line with our competitors," he says.

"It doesn't put us in front. But it puts us back where we were, with specification adjusted. We are now fundamentally re-aligned."We're not cheaper. But on specification we're now better value."

"Our value-for-money prospotiion, at the stage we're in with our product cycle, had eroded and we needed to address that."