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Toyota to detail recall fix; Korean rivals gain

Toyota to detail recall fix; Korean rivals gain
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First Published: Mon, Feb 01 2010. 05 06 PM IST
Updated: Mon, Feb 01 2010. 05 06 PM IST
Tokyo / Seoul: Toyota Motor Corp will detail plans on Monday to fix the accelerator pedals behind a series of crashes and the global recall of millions of vehicles as it scrambles to put its worst public relations crisis behind it.
Toyota, whose reputation of quality and reliability helped it overtake General Motors Co as the world’s top carmaker, is facing criticism of moving too slowly to address a sometimes deadly problem of unintended acceleration in many of its cars.
Including recalls in China and Europe, some 7.9 million Toyota vehicles are up for repair globally, including a separate problem involving floor mats and pedals.
“This (recall) was expanded across the globe and has really put Toyota under the spotlight,” said Hiroaki Osakabe, a fund manager at Chibagin Asset Management.
“This could hurt Toyota’s brand image and there’s definitely concern about a longer-term damage to the image...It could also affect Toyota’s overall competitiveness.”
Toyota Motor Sales USA, its local sales company, said it would issue a news release, followed by a conference call for media.
Toyota, which reports its third-quarter results on Thursday, has been forced to halt sales of eight recalled models in North America, including the top-selling Camry, until it comes up with a fix.
On Sunday, Toyota also kicked off a media blitz with full-page ads in major US newspapers alerting consumers to the recall and production shutdown that will last at least a week.
Jim Lentz, president of Toyota Motor Sales USA and a 28-year veteran at the carmaker, is also due to appear on US morning TV shows, including NBC’s Today.
Middle East may be affected
The recall, which covers almost 1.9 million cars in Europe and China that use faulty accelerator pedals made by US supplier CTS Corp, has spread to some PSA Peugeot Citroen cars made at a joint Toyota-PSA factory in the Czech Republic.
Toyota said on Monday an unknown number vehicles in the Middle East were also fitted with defective accelerators, but the problems seen elsewhere were unlikely to occur there because of the difference in climate.
Toyota said it was studying the necessary remedy for the two models in the Middle East.
The remedy being readied by Toyota and CTS elsewhere involves a shim, also called a spacer, that will be placed in the accelerator to keep it from sticking when affected by condensation, sources said.
Fears of a heavy and protracted blow to Toyota’s sales and bottom line have knocked off about $20 billion from its market value in the last week.
Toyota shares on Monday fell 1.2%, faring better than local rivals Honda Motor Co, which lost 2.5%, and Nissan Motor, which shed 2%.
In contrast, shares of South Korean rivals rose on Monday amid prospects of customer gains and data showing further strong sales in January.
Hyundai Motor Co added 2.7% after its overseas sales in January jumped 46% from a year earlier, while Kia Motors Corp surged 5.6% after reporting record sales.
“Recent negative newsflows on Toyota point to an opportunity for Hyundai Motor to increase their market share overseas,” said Kong Jeong-ho, an analyst at Prudential Investment & Securities.
Edmunds.com, an online automotive research site, expects Toyota’s US sales in January to fall 12%, giving it a market share of 14.7%, near a four-year low and down 3.2 percentage points from a year earlier.
Hyundai has launched an Toyota-targeted incentive programme, joining GM, Ford Motor Co and others in a similar plan.
Minimum four-week sales shutdown
Sources briefed on Toyota’s plans have said it expects to begin repairing or replacing flawed accelerator pedals on 2.3 million vehicles as early as this week. If all goes smoothly, Toyota could limit losses to a four-week sales shutdown.
A Japanese transport ministry official said there was no such trouble for Toyota cars sold in Japan because the structure of the pedals was different.
A company source has said top executives from Toyota headquarters, possibly including President Akio Toyoda, were preparing to address media in Japan soon after the solution is announced in the United States to quell criticism over the lack so far of an official public apology.
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First Published: Mon, Feb 01 2010. 05 06 PM IST
More Topics: Toyota | Japan | Auto | Recall | Jim Lentz |