Toyota Motor Corp., which has been reeling from the brunt of the massive recalls, will not be able to rely on the luxury Lexus brand to boost earnings after the GX 460 sport-utility model was called a "safety risk" by Consumer Reports.
The US magazine gave this Lexus model a "don't buy" recommendation. It's likely that this designation will diminish Lexus sales in the US, making it all the more tragic for Toyota as its overall deliveries dropped due to the massive global recalls of over 8 million vehicles.
Koji Endo, managing director of Tokyo-based Advanced Research Japan, said that there won't be anyone who would want to buy a car that has a "don't buy" rating. He said that even worse is the effect that this will have on the image of the entire Lexus lineup.
Before the magazine's designation, the Lexus brand had been unaffected for the most part by the recalls. To date, Toyota has had to endure US congressional hearings, a reprimand from Transportation Secretary Ray LaHood, and a proposed $16.4 million fine.
There were several Lexus models that were recalled due to floor mats that might trap gas pedals and result to unintended acceleration but none were recalled later to fix sticky accelerators.
In the US, Lexus sales rose 18% in the first three months of the year - accounting for 13% of Toyota's total deliveries in the country. Advanced Research's Endo claims that Toyota's priciest Lexus models earn at least 10 times the operating profit per vehicle of a Toyota Corolla compact car. [via autonews]