Toyota fears greater damage from latest recall

By YURI KAGEYAMA

posted: 7 DAYS 22 HOURS AGO

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NAGOYA, Japan -A Toyota executive said the damage to the company's sales from its global recall for a gas pedal problem may be greater than previous recalls because of the unprecedented scale.

Toyota Motor Corp. Executive Vice President Shinichi Sasaki, who oversees quality control at the world's No. 1 automaker, acknowledged a perception the company was slow in responding to the problem of accelerators that could stick in the depressed position.

But he said the Japanese automaker had made finding a fix a priority. Although the recalls were announced Jan. 21, it was not until Monday that a U.S. executive outlined details of what had to be fixed.

Sasaki said he didn't yet know how the recalls were going to hurt sales or earnings. He said, generally after a recall, sales drop about 20 percent in the first month and then gradually recover.

The damage from the latest recalls may be greater, he said. "This is unprecedented in having caused this huge problem for customers," Sasaki told a news conference at Toyota's Nagoya office.

According to numbers Toyota released Tuesday, the recall covered 4.45 million cars worldwide — 2.48 million of them in North America, 1.71 million in Europe, some 80,000 in China and 180,000 in other regions, including the Middle East.

The recall spans some 2.3 million in the United States, including some of Toyota's best-selling models, such as the Camry and Corolla. It has recalled millions more because of floor mats that can catch the gas pedal.

The numbers are huge partly because of Toyota's stellar sales success around the world in recent years, but also because all automakers try to use the same part across many models to cut costs.

Sasaki said there were no electronic problems in the vehicles being recalled in the U.S. and the earlier recall for floor mats was "totally unrelated" to the pedal problem.

There was some fear among American consumers that the floor mat recall may have been related to the problem with gas pedals.

The company had investigated for electronic problems, and had "not found a single case" pointing to that, he said.

Some analysts have been critical of Toyota, saying it acted too slowly.

Masaaki Sato, who has written books on Japanese automakers, including Toyota, said the biggest mistake was not having President Akio Toyoda immediately give an explanation and squelch fears among owners.

"He should have rushed over to the U.S. or called a news conference in Tokyo," Sato told The Associated Press. "Toyota underestimated the seriousness of the problem."

Toyoda largely ignored media requests for comment on the recalls. He gave an apology to customers when approached by Japanese broadcaster NHK last week while he was in Davos, Switzerland, for a conference.

Toyota said a repair, which was set to begin within days, involves installing a steel shim a couple of millimeters thick in the pedal assembly, behind the top of the gas pedal, to eliminate the excess friction between two pieces of the accelerator mechanism.

In rare cases, Toyota says, that friction can cause the pedal to become stuck in the depressed position.

Toyota's approach was working hard to find a fix for the problem, and that had resulted in owners having to wait for an explanation, Sasaki said.

"We put our customers first," he said. "But what happened as a result may have been unfortunate. But we stuck to our view to the end."

Sasaki acknowledged it took some prodding from the U.S. National Highway Traffic Safety Administration for Toyota to decide to make the gas-pedal recall. He said officials recommended a recall late last year.

Sasaki said Toyota knew of problems with gas pedals in 2007 with the Tundra pickup and had changed the material of the pedal part to deal with that problem.

But the new material did not hold up to friction and had caused the pedal to stick in some cases, leading to the latest recall, he said.

Toshirou Yoshinaga, analyst at Aizawa Securities, said the problem wasn't the recall measures but the absence of a management voice to assuage the worries of owners.

"The top management should have gone public sooner to address the American public," he said. "The trust in Japanese quality, in Toyota, has been shaken."

Investors appeared to welcome Toyota's response. Toyota shares soared in Tokyo trading, gaining 4.5 percent to close at 3,605 yen ($40).

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Associated Press Writer Jay Alabaster in Tokyo contributed to this report.

2010-02-02 03:04:19