Toyota extends recall to Europe amid US problems

Toyota Motor Corp is extending to Europe the recall of millions of its most popular cars due to dangerous accelerator pedals.

Toyota extends recall to Europe amid US problems

Toyota Motor Corp is extending to Europe the recall of millions of its most popular cars due to dangerous accelerator pedals.

Toyota said it had not yet determined how many vehicles in Europe would be recalled, or when, but media and analysts have said 2 million cars may be affected on top of some 6 million now recalled in North America.

Toyota raced past US giant General Motors in 2008 to become the world's top-selling automaker, but it has been bedeviled by a series of safety issues that have raised questions about whether its quality control has suffered.

"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 4 percent in Tokyo trading on Thursday, taking losses since last week to more than 15 percent and wiping about $25 billion in value from Japan's largest company by market capitalization.

A Toyota Europe spokeswoman said the models and exact number of potentially affected vehicles was under investigation but there was no need to stop production.

Toyota late on Wednesday also offered to replace floor mats or pedals on another 1.1 million U.S. vehicles if customers wanted. With that voluntary measure, Toyota would be dealing with nearly 6 million U.S. vehicles for accelerator-related problems across its lineup.

A further 2 million in Europe would take the total to 8 million, almost the same as its group global sales last year.

Cars sold in Japan do not use the parts in question.

Late Wednesday the Japanese giant announced a recall of almost 1.1 million more vehicles in the United States to replace floor mats that could trap accelerator pedals.

The company said five models had been added to the recall: the 2008-2010 Highlander, the 2009-2010 Corolla, the 2009-2010 Venza, the 2009-2010 Matrix and the 2009-2010 Pontiac Vibe.

The total number of cars and trucks affected by that action now stands at almost 5.3 million -- equivalent to more than two thirds of Toyota's 2009 sales of 7.81 million vehicles.

Alongside the floor mat trouble, Toyota last week recalled 2.3 million cars and trucks because of problems with sticking accelerator pedals.

"On watch negative"

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.

Toyota's operating profit in July-September was 58 billion yen.

Toyota said this week it expects a 6 percent rise in groupwide global sales to 8.27 million units in 2010, but according to a company spokesman in Tokyo, the outlook does not take this sales suspension into account.

Fitch said it was putting Toyota on watch negative.

"The recalls and sales and production suspension cast a negative light on Toyota's reputation for quality, just as the company emerges from an unprecedented downturn in the auto industry," said Jeong Min Pak, Senior Director in Fitch's Asia-Pacific Corporates team. "This could hamper the company's potential sales and profitability recovery, especially in the U.S. market."

Shares in Asian rivals Honda Motor and Nissan Motor rose 3.3 percent and 2.8 percent respectively. South Korea's Hyundai Motors, which beat expectations with a record profit for the fourth quarter, rose 4.1 percent.

"Honda, Nissan and Ford Motor stand to benefit if Toyota experiences a prolonged sales slump," Kota Yuzawa, auto analyst at Goldman Sachs in Tokyo, wrote in a memo to clients. ($1=90.32 Yen)


Agencies

Last Mod: 29 Ocak 2010, 04:43
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