Toyota resumes sales amid probe into Prius brakes
LOS ANGELES (MCT) — Toyota dealers resumed selling vehicles Thursday that were pulled from the sales lot to address sudden-acceleration problems as the automaker said lost sales and a series of related recalls would cost $2 billion.
That recall price tag would be one of the most expensive in automotive history, said auto information company Edmunds.com.
Also, the state Assembly reacted to Toyota Motor Corp.’s safety recalls and its decision to shutter the state’s last auto manufacturing plant by voting Thursday to stop buying Toyota cars for use by lawmakers when they’re in Sacramento. The Assembly Rules Committee voted to resume a 2003 policy of buying only U.S.-made cars for its 130-vehicle fleet.
Toyota stopped sales of eight models — including its top-selling Camry and Corolla — on Jan. 26, saying the gas pedals could get stuck and cause runaway acceleration. The automaker also shut down production of the vehicles for a week while it examined how to fix the problem, which it attributed to wear on the pedal system.
“We now have more than enough parts at dealers to take care of the flow of repairs. Dealers may sell a new car if the repair is made,” said Mike Michels, a Toyota spokesman. “There is no single point in time when the stop sale would be lifted. It will be car by car.”
Repairs of new vehicles won’t hamper Toyota’s ability to get Toyota owners back on the road, he said.
After a shopper at Longo Toyota in El Monte, Calif., purchased a 2010 Corolla on Wednesday, Longo made the fix and delivered the car, said Tom Rudnai, Longo’s general manager.
But unless there’s buyer interest, Longo doesn’t plan to fix its inventory until customer repairs are completed, he said.
Sales resumed as Toyota detailed its financial results in a conference call early Thursday in Tokyo. The call came before the announcement by U.S. transportation safety officials that they had opened an investigation into whether the 2010 Prius hybrid suffers from a momentary loss of braking capability when the car goes over a rough road surface or pothole. Japanese transportation officials are also looking at the problem.
The Prius problems and the size of Toyota’s recall and repair expenses sent Toyota stock plunging again Thursday, dropping $1.71, or 2.3 percent, to $71.78. It has fallen 22 percent since the company’s large recall to fix a sticky gas pedal that could cause unintended acceleration.
Toyota broke the cost of its loss down to about $1.1 billion to pay for two large recalls and about $880 million in lost vehicle sales.
The company expects its quality issues, including suspending sales of eight of its most popular U.S. models, to result in the loss of sales of 100,000 autos this year, including about 80,000 in North America.
Some analysts questioned whether Toyota had a good feel for how much its recalls and quality issues would cost the company.
“There are so many unknowns at this point that it is hard to put a number on this thing. I think that there is a much greater likelihood that the fallout from this will be worse than expectations,” said B. Craig Hutson, an analyst with Gimme Credit, an independent corporate credit research firm.
Despite its recall problems, Toyota posted what analysts called an unexpectedly healthy profit for the third quarter of its fiscal year. Toyota earned $1.7 billion in the quarter ended Dec. 31 compared with a loss of $1.8 billion a year earlier, when the global recession caused car sales industrywide to plummet. It posted North American operating profit of about $77 million compared with a loss of $131 million a year earlier. The North American numbers exclude gains or losses from interest rate swaps.
The company also boosted its sales forecast for the fiscal year ending in March.
Analysts were skeptical.
“They have handled this poorly. I am not convinced that they have in fact identified the problem,” Hutson said. “The congressional hearings will pile on negative headlines, and there are plenty of other choices out there for consumers.”
