Toyota Motor Corp.’s accelerator pedal problem isn’t likely to have much of an impact on its bottom line this year, but the damage to its image will undermine it in the long term, analysts said Thursday.
“The impact on Toyota’s business performance will be limited,” an auto analyst at a Japanese securities house said on condition of anonymity. “But Toyota’s image of safe and high quality is damaged.”
The world’s top automaker said Thursday it will recall an additional 1.09 million vehicles in the United States to rectify potential problems with gas pedals and floor mats.
The announcement came a day after Toyota said it would suspend U.S. sales of eight models — including the top-selling Camry — because the accelerator pedals could get stuck.
Analysts were forecasting a rebound in earnings for the business year to March 2011 because the failure of U.S. rivals General Motors Co. and Chrysler Corp. were expected to boost Toyota’s sales in the North American market.
That scenario is no longer likely, they said.
In 2008, Toyota became the world’s biggest automaker in production terms after going all-out to chase GM for the title. But that achievement, signaling GM’s first fall from the top in 77 years, may have come at a dear price.
“We projected that Toyota would take advantage of the opportunity,” said Shigeru Matsumura, an auto analyst at SMBC Friend Research Center. “But it is likely that Toyota won’t be able to recover that much.”
Analysts said Toyota is highly likely to lower its 2010 sales target in North America after projecting an 11 percent surge to 2.19 million units earlier in the business year.
The recall and production halt are also likely to encourage its rivals, U.S. and Japanese alike, to compete even harder.
On Wednesday, in a bid to lure its customers, GM launched an incentive campaign aimed at owners of Toyota vehicles.
Toyota is already in red ink. The automaker said in November it expected a ¥350 billion group operating loss and a ¥300 billion group net loss for the business year ending in March.
Analysts agree that one thing that could help Toyota out is the yen-dollar exchange rate. A weaker yen could help Toyota offset any fall in sales and shore up its overseas profits, they said.
As for the cause of the latest recall, many analysts say the accelerator defect might be deep-rooted in the company’s internal operating system. When the carmaker expanded overseas production in the previous decade, its priority was to meet rapidly growing demand, the unnamed analyst said.
As a result, quality control suffered at the expense of faster production, the analyst said.
“Toyota wasn’t perfect like everyone else after all,” he said.
Toyota said the flawed pedal was supplied by a parts maker in North America. The parts maker, CTS Corp., said Thursday it is ready to supply Toyota with replacements.
“But Toyota is responsible for the design problem,” said Toyota spokesman Hideaki Honma, “because we conducted the quality check and go-signed.”
Japanese drivers aren’t affected by the recall, but it could affect drivers in areas other than the United States.
The component that was used in all but the latest European models is the same one used in the U.S., Honma said.
$1,000 to switch: GM
New York JIJI General Motors Co. said Wednesday it will offer incentives for Toyota Motor Corp. customers to switch to GM, in a move to capitalize on the recall problem that has hit its Japanese rival.
Through the end of February, GM will give people who trade in Toyota vehicles for a GM model a $1,000 cash rebate and an interest-free, five-year loan.