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Thu, Oct 01, 2009 - Page 10 News List

Toyota recalls 3.8 million vehicles over floormat flaw

BAD PUBLICITY The recall includes the popular Prius hybrid and is the largest ever for Toyota, which has built a reputation for safety that helped it outsell GM last year

REUTERS , DETROIT AND WASHINGTON

Robots weld the bodyshell of a car on the assembly line at the Toyota plant in Melbourne, Australia, on Aug. 31. Toyota has announced a recall in the US of millions of vehicles after problems with the floormats in the models were suspected in crashes that killed five people. The US government said there were reports of around 100 incidents possibly related to the flaw.

PHOTO: REUTERS

Toyota Motor Corp said it would recall some 3.8 million vehicles in the US because of the risk that a loose floormat could force down the accelerator, a problem suspected of causing crashes that have killed five people.

The recall includes the hot-selling Prius hybrid and would be the largest ever for Toyota, which has built a reputation for safety and quality that helped it surpass General Motors as the world’s top automaker last year.

The US government said it has received reports of 100 related incidents that include 17 crashes and five fatalities involving Toyota vehicles.

Toyota said it was too early to provide a cost estimate for the move.

Deutsche Securities auto analyst Kurt Sanger estimated the cost at a modest ¥5 billion to ¥10 billion (US$50 and US$100 million), saying the bigger worry was its image.

“Monetarily I wouldn’t expect it to be a major issue for Toyota,” he said, noting that labor costs, which typically make up the bulk of recalls, would likely be minimal. “The bigger concern is reputational.”

SHARES DOWN

Toyota shares were down 1.1 percent in Tokyo yesterday, underperforming a 0.2 percent fall in the main Nikkei average and a rise in rival Japanese car stocks.

Toyota spokesman Yuta Kaga in Tokyo said the floormats subject to the recall are used only in vehicles sold in the US.

The company is also checking whether the problem originates in the floormats or the process of placing them in the vehicles, he said, without naming the floormat supplier.

Toyota and US safety regulators warned owners to remove all driver-side floormats from eight Toyota and Lexus models manufactured in the last six years as an immediate safety precaution.

Last month, an off-duty California state trooper and three members of his family were killed in the San Diego area in a crash of a 2009 Lexus ES350.

Before the crash, a passenger in the car had called 911 and told dispatchers that the accelerator was stuck and the car had reached 193kph.

The recall will cover the Camry and Avalon sedans, the Prius hybrid, the Tacoma and Tundra pickup trucks and luxury Lexus models, the IS250, the IS350 and the ES350.

PREVIOUS RECALL

Toyota’s largest previous recall was in 2005 for a problem with steering rods, covering about 900,000 vehicles.

The pending recall will be equivalent to about double Toyota’s annual sales in the US market.

“This is a negative issue and is going to cost [Toyota] very much. [It’s] not good for advertising,” said Yuuki Sakurai, CEO of Fukoku Capital Management in Japan.

“But I’m not worried much about this problem and whether it will remain a negative factor for Toyota in the long term. They can overcome it,” he said.

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