The big recall might affect Toyota’s image

Article by Christian Andrei, on August 26, 2010

Toyota Motor Corp.'s image takes a beating due to the recall of 3.8 million vehicles it had announced days ago. While Toyota has yet to estimate the costs related to its largest US recall ever, analysts are already saying that it would be Toyota's reputation that would suffer the most. The recall stemmed from an accident that had caused the death of 5 people.

A loose floor mat is said to have caused a jam in the accelerator. The Prius hybrid is included in the list of models to be recalled, says Autonews.

Aside from the damaged image, the recall would also lead Toyota to disrupt its plan to cut on spending in order to recover from record losses forecast this year amid a global collapse in auto sales.

Yuuki Sakurai, CEO of Fukoku Capital Management in Japan, said that this won´t be good for advertising and it would cost Toyota very much. However, he said that Toyota will overcome it.

Deutsche Securities auto analyst Kurt Sanger estimated the cost at a 5-10 billion yen ($50-$100 million). He said that the labor costs, which make up the bulk of recalls, won´t be a major issue for Toyota and these would be minimal.

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