Toyota suffers as recall grows
Friday, 29 January 2010
TOKYO/DETROIT, Jan 28 (Reuters): Toyota Motor Corp could face an unprecedented recall of eight million cars over problems with sticking accelerators in the biggest ever blow to the reputation of the world's largest auto maker.
The recall and related sales suspension in North America have dented Toyota's once unshakeable record for safety and reliability and come as its grapples with a patchy recovery from an unprecedented global downturn in the industry and growing competition.
"Toyota's got the resources to bounce back from this, but this is the biggest crisis that they have ever faced, and Ford and Hyundai and others are coming on strong," said Jim Ziegler, an auto dealer consultant in Atlanta.
Shares of Toyota fell a further four per cent in Tokyo trading Thursday, taking losses since last week to more than 15 per cent, wiping about $25 billion in value from Japan's largest company by market capitalisation.
Toyota said late Wednesday that it would also offer to voluntarily fix another 1.1 million vehicles that may face a risk that floor mats could trap accelerator pedals and cause bursts of sudden acceleration.
Taken together, Toyota would be recalling nearly 6 million vehicles for accelerator-related problems across its lineup, a sweeping safety action that has emboldened its rivals.
A recall could expand into Europe as well, where the same pedals are used for some models. Japanese media have reported the company is considering recalling two million vehicles there.
That would take the total number to eight million, almost the same as its group global sales last year.
A Toyota spokesman in Tokyo said the automaker would consider whether it needs to issue a recall in Europe. But even if Toyota issues a recall, it will not have to suspend sales and production there as the parts are not already used, the spokesman added.
Cars sold in Japan do not use the parts in question.
Analysts said the financial damage to Toyota from the recalls would depend on how long it has to shut production on key models and how badly consumer confidence is shaken as reflected in pricing of both new and used cars.
"The sales and production suspension could cost Toyota at least 50 billion yen ($553 million) in operating profit per month," said Koji Endo, auto analyst at Advanced Research Japan.
The recall and related sales suspension in North America have dented Toyota's once unshakeable record for safety and reliability and come as its grapples with a patchy recovery from an unprecedented global downturn in the industry and growing competition.
"Toyota's got the resources to bounce back from this, but this is the biggest crisis that they have ever faced, and Ford and Hyundai and others are coming on strong," said Jim Ziegler, an auto dealer consultant in Atlanta.
Shares of Toyota fell a further four per cent in Tokyo trading Thursday, taking losses since last week to more than 15 per cent, wiping about $25 billion in value from Japan's largest company by market capitalisation.
Toyota said late Wednesday that it would also offer to voluntarily fix another 1.1 million vehicles that may face a risk that floor mats could trap accelerator pedals and cause bursts of sudden acceleration.
Taken together, Toyota would be recalling nearly 6 million vehicles for accelerator-related problems across its lineup, a sweeping safety action that has emboldened its rivals.
A recall could expand into Europe as well, where the same pedals are used for some models. Japanese media have reported the company is considering recalling two million vehicles there.
That would take the total number to eight million, almost the same as its group global sales last year.
A Toyota spokesman in Tokyo said the automaker would consider whether it needs to issue a recall in Europe. But even if Toyota issues a recall, it will not have to suspend sales and production there as the parts are not already used, the spokesman added.
Cars sold in Japan do not use the parts in question.
Analysts said the financial damage to Toyota from the recalls would depend on how long it has to shut production on key models and how badly consumer confidence is shaken as reflected in pricing of both new and used cars.
"The sales and production suspension could cost Toyota at least 50 billion yen ($553 million) in operating profit per month," said Koji Endo, auto analyst at Advanced Research Japan.