The costs confronting Toyota as a result of its quality crisis will keep climbing

Article by Christian A., on August 25, 2010

The barrage of recalls may have halted, but Toyota Motor Corp. isn't any closer to a clear resolution. In fact, analysts say that the costs will keep rising. Toyota estimates that the worldwide recalls will cost the company $2 billion. But it should be pointed out that this figure only covers the recalls from last Autumn until January that covers the floor mat and sticky-pedal actions.

The Prius antilock brake recall in February would still have to be accounted for. The $2 billion estimation also fails to consider the rise in incentives and advertising costs as well as the costs to deal with the lawsuits that have been received in the last two months.

Let's also not forget about the record $16.4 million fine imposed April 5 by the US government. Some analysts estimate that the total bill could exceed $4.43 billion.

Toyota attempts to get itself out of this rut while at the same time, aiming to bounce back after it suffers its first operating loss in seven decades. In response to its dilemma, Toyota has postponed the production of the US Prius, cut labor costs by reducing hiring in Japan, realigned its Japanese manufacturing base, and suspended production in Europe.

Last March 30, a task force was launched to improve global quality control. It is believed that the changes to be proposed by the group, as well as actions in response to consumer complaints and other internal quality-control committees, would add to the overall cost.

Kurt Sanger, an auto analyst at Deutsche Securities in Tokyo, said that before this issue, Toyota had already needed to be restructured and to have its costs reduced but the current pressure on earnings just makes it "even more challenging."

If you liked the article, share on:

Comments

Recommended

Like it or not, Chevrolet may soon be offering a cheaper Camaro in hopes of competing with Dodge Challenger and Ford Mustang GT. Apart from the less expensive trim, the...
by - August 17, 2017
Recently, Porsche revealed a new Macan Turbo wearing a Performance Package and a unique Porsche Motorsport themed paint. At first look, it will remind you of the 919 Hybrid and...
by - August 17, 2017
The BMW M1 will be one of the most exclusive cars that will be showcased at the upcoming 2017 Pebble Beach Concours d'Elegance, alongside many other extravagant models. Firstly, there...
by - August 17, 2017
Aston Martin Vanquish Zagato makes its debut with a total of four variations including the Speedster and the Shooting Brake trims. As part of the limited edition model, the company...
by - August 17, 2017
Mitsubishi finally introduces the new Xpander MPV at the 2017 Indonesia International Auto Show in Jakarta Indonesia. Replacing the previous Expander, the new multipurpose vehicle will be mostly sold at...
by - August 16, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries