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Toyota recall to hit year’s sales

Automaker counts the cost as millions of vehicles are returned and competitors entice away its customers

Toyota Motor’s unprecedented recall of millions of vehicles with accelerator problems is taking a toll on sales and may force the world’s largest carmaker to cut 2010 sales forecasts.

US auto sales for January are expected to show a sharp drop for Toyota after it pulled eight of its most popular models from showrooms last week following complaints over sticking accelerator pedals.

In the UAE, Al Futtaim Motors, distributor of Toyota, has said that it sells just two of the eight affected models, the Avalon and Sequoia (model years 2005 to 2010), and that they are “highly unlikely to experience the same potential accelerator issue due to the UAE’s climatic conditions”.

“However, in the interests of delivering the highest standards of customer care, we will undertake the same service campaign launched in the USA.

We will be communicating the details of this service campaign with our Avalon and Sequoia customers.

If any of our customers have concerns they can contact our customer care team,” Simon Frith, managing director of Al Futtaim Motors, said.

Globally, in the first public comment from an executive at Toyota’s head office, the company’s executive in charge of quality said he was expecting a bigger-than-usual impact from the recall.

“The sales forecast is something that we’re extremely worried about,” executive vice president Shinichi Sasaki said.

“Already, I am hearing that sales have been affected somewhat in January.”

On top of a separate recall for slipping floormats also linked to unintended acceleration, Toyota said some 9.1 million vehicles are now being recalled, more than its total group sales last year.

Although Toyota says the occurrence of problems is rare, public confidence is being shaken by coverage of the saga, including the harrowing details of the crash of a Lexus blamed on unexpected acceleration that killed an off-duty California state-trooper and three members of his family last year.

Toyota has detailed its plans to fix the faulty pedals on at least 4.2 million vehicles in North America and Europe with a small metal shim, or spacer, to prevent sticking.

The firm said it would restart on February 8 production of the eight models including its popular Camry, Corolla and Rav4 models after an unprecedented one-week shutdown at six plants in the US and Canada.

Toyota last month forecast global auto sales to rise six per cent this year but has since said that it did not take the impact of the recalls into account.

The costs for the recall and the shutdown now look to come to roughly $1.1 billion to $2.2 billion, two analysts estimated.

“It’s a positive that we now can grasp what the direct costs might be, but Toyota has yet to address uncertainties about indirect costs, such as litigation costs and costs of incentives to win back customers,” said JP Morgan analyst Kohei Takahashi.

“The size of these indirect costs is of far grea-ter importance” for Toyota’s future, he said.

Toyota faces a growing number of lawsuits claiming it and its US supplier CTS Corp endangered drivers by not acting sooner to fix problems with faulty accelerator pedals.

Lawsuits announced on Monday in the US claimed Toyota had ignored signs of trouble.

The suits are part of what is expected to be a wave of litigation against the automaker for claims ranging from losses on car resale values to injury and death.

Analysts and dealers said it would take months for the automaker to fix all of the vehicles at risk of having an accelerator pedal stick in the open position.

Meanwhile, rivals such as General Motors, Ford and Hyundai have been offering discounts targeting Toyota customers.

Categorized | Business News

Tags : automaker, california, europe, family, highly-unlikely, north, uae, usa

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