Toyota set to lose billions over car recall
WASHINGTON/TOKYO: Toyota Motor Corp faced US Congress scrutiny over its biggest ever safety recall as rival Honda Motor Co, tipped to gain from Toyota’s woes, also said it would recall thousands of cars worldwide.
Honda said it would recall a total of 646 000 units of its Fit/Jazz and City models, including 140 000 in the US, because of a faulty window switch, after toddler Vanilla Nurse died in Fish Hoek when fire broke out in a car last year.
The announcement came as investors, suppliers and consumers weighed the impact of an unprecedented halt in US production by Toyota, the world’s biggest car manufacturer.
Honda’s move, as well as Toyota’s recall due to problems with unintended and dangerous acceleration, come at a bad time for the industry as it struggles to lure buyers back to showrooms after a sales slump that helped drag US rivals General Motors and Chrysler into bankruptcy.
In an unusual move, House Energy and Commerce Committee chairman Henry Waxman said he would hold a hearing next month to consider how quickly and effectively Toyota responded to complaints about sticking pedals and slipping floormats.
“Like many consumers, I am concerned by the seriousness and scope of Toyota’s recent recall announcements,” Waxman said in a statement.
Toyota this week suspended North American sales and production of eight models, including its best-selling Camry, after regulatory pressure, and widened the recall to China and Europe. A Toyota spokeswoman said the company was still checking on whether any vehicles are affected in Latin America, the Middle East and Africa.
Japan’s largest company, studied for its devotion to quality, could recall about 8 million vehicles in total – more than the number of cars and trucks it sold worldwide in 2009.
Honda’s recall added to concerns that the safety-conscious image of Japanese manufacturers would be threatened.
Analysts have estimated the sales halt could cost Toyota at least 50 billion yen (R4.2 billion) in operating profit a month.
Toyota shares have dropped 17.6 percent since January 21, when it said it would broaden its recalls by a further 2.3 million vehicles. Shares ended down 2 percent in Tokyo on Friday. Estimates are that it will cost some $250 million (R1.8 bn) in warranty costs alone for Toyota to address the smaller of the two recalls under way in the United States. – Reuters