Business life: My finance news blog

Toyota reels from recall

Toyota’s suspension of U.S. sales of some of its top-selling models — amid intense pressure from the federal government — deals a blow to the automaker’s reputation for quality.

Toyota Motor Corp. announced late Tuesday it would halt sales of certain models — including the Camry and Corolla sedans and the RAV 4 crossover — to fix gas pedals that could stick and cause unintended acceleration. Last week, Toyota issued a recall for the same eight models affecting 2.3 million vehicles.

Toyota is also suspending production at six North American car-assembly plants beginning the week of Feb. 1. It gave no date on when production could restart.

Toyota insisted the problem — sudden, uncontrolled acceleration — was "rare and infrequent" and said dealers should deal with customers "on a case-by-case basis."

Officials under President Barack Obama said they pressed Toyota to protect consumers who own vehicles under recall and to stop building new cars with the problem.

David Strickland, the administrator of the National Highway Traffic Safety Administration, told reporters in Washington that the Transportation Department had been in regular

communication with Toyota about the recall.

"Toyota was complying with the law. They consulted with the agency. We informed them of the obligation, and they complied," Strickland said. He wouldn’t address why Toyota failed to stop selling the vehicles five days earlier when it announced the recall.

Across the country, Toyota dealers —swamped by calls Wednesday from drivers — said they were concerned the move would hamper sales. They hoped parts to fix the problem could be distributed quickly.

John McEleney, who owns a Toyota dealership in Clinton, Iowa, said the sales stoppage affects about 60 percent of the inventory on his lot.

He said he was hopeful Toyota would come up with a fix soon — especially because the longer a vehicle stays on a dealer lot, the more money a dealer pays in interest fees.

"Short-term, it’s going to be difficult," McEleney said. "It will certainly set us back, but I think the impact will be very short-lived."

Still, Tom Seeger, president of Seeger Toyota in Creve Coeur, said the automaker did the right thing by suspending sales of affected models until the problems are corrected.

"I am just unbelievably impressed by the decision Toyota has made out of concern for safety," he said.

Seeger said Toyota dealerships would provide loaner vehicles for owners whose vehicles show symptoms of the problems. No one had brought such a vehicle back to Seeger Toyota by late Wednesday, he said.

Gerry Hogan, sales manager at Jay Wolfe Toyota of West County in Ballwin, said: "We’ve had calls, but it’s not as bad as I thought it would be. We’ve sold thousands of these Toyotas, and I haven’t seen one (with the gas pedal problems) yet."

Meanwhile, rental car companies Avis Budget Group and Clayton-based Enterprise Holdings on Wednesday said they were pulling thousands of Toyota models covered by the recall.

Enterprise Holdings, which controls the Enterprise, National and Alamo brands, said it would pull an unspecified number of Toyota models from its fleet, accounting for about 4 percent of the cars it has in service. The company also will stop selling used Toyotas while the automaker finds a fix for the problem.

The suspect parts are made by a U.S. supplier, but they are also found in its European-made vehicles. Toyota said it hasn’t decided what to do there.

Sean Kane, director of Safety Research and Strategies, a consumer group that conducts research into motor vehicle safety issues, said his firm has identified 2,274 incidents of sudden unintended acceleration in Toyota vehicles leading to at least 275 crashes and 18 deaths since 1999.

The firm cites as sources the National Highway and Traffic Safety Administration, direct reports from drivers and incidents mentioned in lawsuits. Toyota would not confirm the numbers.

The supplier of the gas pedals used in the recalled car and trucks, CTS Corp. of Elkhart, Ind., said it knew of only a few cases of drivers having problems with accelerators. It said it’s working with Toyota to design a new pedal.

Also late Wednesday, Toyota said it will add 1.09 million vehicles in the United States to an earlier recall over the risk of accelerator pedals becoming stuck in the floor mats.

The fresh recall would affect five models — 2008-2010 Highlander, 2009-2010 Corolla, 2009-2010 Venza, 2009-2010 Matrix, and 2009-2010 Pontiac Vibe, which is built on a Toyota platform. Toyota has already recalled 4.2 million vehicles in the U.S. over such problems. About 1.7 million vehicles fall under both recalls.

Two years ago, Toyota beat out General Motors Co. to become the world’s largest automaker. Now it is stopping some sales in its biggest market, the U.S., when it desperately needs to sell cars here after reporting its first-ever annual loss last year.

John Wolkonowicz, a longtime auto analyst with IHS-Global Insight, said Toyota is fortunate in that it has a loyal customer base — primarily baby boomers who have been buying Toyotas for decades. That, he said, will help minimize the sales impact in the short term.

"But it will further impede their ability to get the younger buyers that they so dearly want to get into the Toyota fold," Wolkonowicz said.

The sales halt calls into question the aggressive growth strategy pursued under former company president Katsuaki Watanabe, a cost-cutting expert, who led the Japanese automaker to the No. 1 spot in global vehicle sales in 2008, analysts say.

The automaker’s problems in the U.S. may be an extension of the spate of quality problems that plagued Toyota several years ago in Japan, its home market, during the aggressive growth strategy pursued under Watanabe.

In 2006, the Japanese government launched a criminal investigation into accidents suspected of being linked to vehicle problems, though no one was charged. Watanabe later acknowledged overzealous growth was behind the quality problems.

Watanabe was replaced last year by Akio Toyoda, the grandson of Toyota’s founder.

The problems hit Toyota extra hard because it has touted quality for years to gain advantage over competitors, said Brenda Wrigley, chair of the public relations department at Syracuse University’s S.I. Newhouse School of Public Communications.

"Quality was their differentiator, and now it’s their Achilles heel," she said.

The Associated Press, Detroit Free Press and Robert Kelly of the Post-Dispatch contributed to this report.

Source

Dieser Beitrag wurde am Sunday, 31. January 2010 um 21:54 Uhr veröffentlicht und wurde unter der Kategorie technology abgelegt. Du kannst die Kommentare zu diesen Eintrag durch den RSS-Feed verfolgen.

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