Toy­ota set to lose bil­lions over car re­call

Weekend Argus (Saturday Edition) - - BUSINESS -

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

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