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Hyundai feeds on Toyota woes; GM joins recalls

Hyundai feeds on Toyota woes; GM joins recalls
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First Published: Tue, Mar 02 2010. 02 16 PM IST
Updated: Tue, Mar 02 2010. 02 16 PM IST
Seoul / Detroit: South Korea’s Hyundai Motor Co announced a sharp rise in February sales, benefiting from recall woes at rival Toyota Motor Co, which planned aggressive incentives to win back US customers.
Toyota is facing a slide in US sales after recalling more than 6 million vehicles there due to problems with uncontrolled acceleration and braking glitches which have shone a spotlight on vehicle safety issues.
US auto sales data, due later on Tuesday, are expected to show Toyota’s market share sliding to its lowest level in more than five years, according to industry tracking firm Edmunds.com.
In the latest of a string of product problems across the industry, General Motors Co said it was voluntarily recalling 1.3 million vehicles in North America to fix a power steering problem linked to 14 crashes and one injury.
GM said the affected vehicles can be still be “safely controlled” but it may require greater steering effort under 15 mph (24 kph).
“After our in-depth investigation, we found that this is a condition that takes time to develop. It tends to occur in older models out of warranty,” GM vice president of Quality Jamie Hresko said in a statement.
Hyundai, which has been enjoying a surge in popularity for its cheap and fuel efficient models, said its February sales jumped 23% from a year ago to nearly 250,995 vehicles.
Hyundai has sought to cash in on the hit to Toyota’s reputation, offering incentives for consumers to switch to its models such as the Sonata and Elantra.
Incentives
Toyota, which is facing an investigation for steering problems in its popular Corolla model, is not yet out of the woods on its recalls. The world’s largest automaker said on Monday it will replace an oil hose in almost 1 million US vehicles due to the risk of a leak that could damage the engine. The fix includes late-year models of Camry, Avalon, Rav4, and Lexus 350 ES and 350 RX.
In an effort to regain US market share, Toyota will offer zero-percent financing for 60 months on some 2010 model year vehicles, including its most popular Camry and Corolla sedans and other vehicles involved in safety recalls, a source briefed on the matter told Reuters on Monday.
Returning Toyota customers will also receive a complimentary two-year maintenance package, while cash rebates ranging from $500 to $3,000 will also be offered, the source said.
The person declined to be identified because the information has yet to be announced by Toyota.
Kazaka Securities analyst Yoshihiko Tabei the measures were a step in the right direction to avoid further damaging cuts in production.
“Lower factory utilisation rates would have a substantial negative impact on Toyota’s earnings. It is crucial for Toyota to drive sales so it does not need to lower production levels.”
US sales hit
Industry tracking firm Edmunds.com sees Toyota’s market share dropping to 12.6% in February, its lowest level since July 2005 and compared to 17% for all of 2009, as Toyota cut sales and production of some its most popular models last month.
Shares in Toyota were largely flat in Tokyo trade, having fallen more than a fifth since late January, when the recall crisis erupted. Some $30 billion in the company’s market value has been wiped out since then.
Hyundai shares ended down 1.3% ahead of its sales data.
Toyota global quality control chief Shinichi Sasaki and North American president Yoshimi Inaba are scheduled to appear before a Senate committee on Tuesday for a third hearing on its handling of consumer complaints about sudden acceleration.
In written testimony released before his appearance, Sasaki reiterated Toyota’s plans to tackle quality and safety issues including working more closely with regulators, giving regions more autonomy on recalls and improving information sharing between regions.
Inaba said dealers had repaired more than 1 million of the 6 million recalled US vehicles
President Akio Toyoda, who appeared before a Congressional panel last week, returned to Japan on Tuesday, having also travelled to China to apologise in person for the recall problems.
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First Published: Tue, Mar 02 2010. 02 16 PM IST
More Topics: Hyundai | Toyota | GM | Auto | Recall |