Toyota's $2b recall hit to keep it in the red
Friday, 5 February 2010
TOKYO/WASHINGTON, Feb 4 (Reuters): Toyota Motor Corp expects costs and lost sales from its massive safety recall to total two billion dollars by the end of March, keeping it in the red for the year despite its strongest profit in six quarters.
Toyota's recall of more than eight million vehicles due to problems with unintended acceleration has wiped out $30 billion in share value, hurt its reputation and overshadowed what until just two weeks ago had been expected to be an upbeat story of improving earnings.
"Toyota's recall this time is unlike any other in auto industry history," said Lee Sung-Jae, an analyst at Kiwoom Securities in Seoul. "The scale is huge to begin with, and this deals a fatal blow to the very core value Toyota represented -- that is the quality of its cars."
Automakers enjoyed a boost in demand in the latter part of 2009, thanks largely to government incentives designed to spur sales and improving access to credit as the global economy recovered.
Toyota was one of the biggest beneficiaries of the US cash-for-clunkers scheme, allowing it to post its best quarterly operating profit since early 2008 in the three months to December.
But the world's largest automaker is now under investigation for its handling of the recall of a host of its most popular models including the Camry, Corolla and Rav4.
Up to 19 US crash deaths over the past decade may be linked to accelerator-related problems at Toyota, congressional officials have said.
Toyota's recall of more than eight million vehicles due to problems with unintended acceleration has wiped out $30 billion in share value, hurt its reputation and overshadowed what until just two weeks ago had been expected to be an upbeat story of improving earnings.
"Toyota's recall this time is unlike any other in auto industry history," said Lee Sung-Jae, an analyst at Kiwoom Securities in Seoul. "The scale is huge to begin with, and this deals a fatal blow to the very core value Toyota represented -- that is the quality of its cars."
Automakers enjoyed a boost in demand in the latter part of 2009, thanks largely to government incentives designed to spur sales and improving access to credit as the global economy recovered.
Toyota was one of the biggest beneficiaries of the US cash-for-clunkers scheme, allowing it to post its best quarterly operating profit since early 2008 in the three months to December.
But the world's largest automaker is now under investigation for its handling of the recall of a host of its most popular models including the Camry, Corolla and Rav4.
Up to 19 US crash deaths over the past decade may be linked to accelerator-related problems at Toyota, congressional officials have said.