Toyota’s Mounting Bill

The spectacle of Toyota Motor’s grim-faced chief executive, Akio Toyoda, being grilled Wednesday by a congressional committee about runaway cars did little to repair the battered image of the Japanese automaker. But what will the financial damage be? It depends on how long the mess drags on, and whether any further recalls are announced. But no one who tracks the auto industry thinks the company’s estimate of $2 billion is even close to the final tally. Craig Hutson, a debt analyst who follows Toyota ( TM – news – people ) for GimmeCredit.com, provides a litany of reasons why it’s likely to cost Toyota much more. Toyota’s sales, which fell 16% in January after it halted production and sales for a week, will weaken further, Hutson believes, forcing the company to offer much higher incentives to move its vehicles. [Read the full article]

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The pitchfork-bearing populists calling for Akio Toyoda’s head would do well to remember that in the annals of recall history, Toyota’s latest is just a blip on a radar screen filled with contaminated school lunch meat and toxic baby formula. Toyota’s ( TM – news – people ) floor mats and sticky pedal problems, combined, have led to the recall of 6.5 million vehicles in the U.S. That number could skyrocket if safety advocates can prove the automaker’s sudden acceleration issues are instead tied to more sinister electrical troubles. But for now, Toyota’s recall is still well short of the largest vehicle recall of all time. That dubious honor belongs to Ford’s 14.9 million vehicles (and counting) recall for a faulty cruise control switch that causes spontaneous engine fires. Still there seems to be something about the idea of your Camry careening to a terrifying death that has captured the public imagination like few other deadly recalls. [Read the full article]

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