Toyota estimates recall, repairs to cost $1.1 billion

DETROIT — Toyota estimated the recall and repair of more than 5.6 million vehicles will cost about $1.1 billion, and shaken consumer confidence could result in $770 million to $890 million from lost sales.

Even so the automaker reported a profit for the quarter that ended Dec. 31, 2009, of $1.7 billion, on sales of $58.9 billion. Those sales were 10 percent higher than Toyota’s sales in the year-earlier quarter. The profit reversed a loss of $1.8 billion a year earlier.

For its fiscal year, which ends March 31, Toyota expects to report a profit of $889 million, much stronger than a previous forecast.

That full-year forecast did include the estimated cost of Toyota’s largest-ever product recall in the United States. But it did not include the costs associated with fixing reported problems with brakes in its 2010 Prius hybrid.

During a conference call with analysts, Toyota managing officer Takuo Sasaki defended the company’s estimate that it expects to sell 100,000 fewer
vehicles worldwide in the next year due to the damage the unintended
acceleration concerns have done to Toyota’s reputation for industry-leading quality. Several analysts told Sasaki the company could lose many more than 100,000 sales.

Earlier this week, Bob Carter, general manager of Toyota division in the United States, said the company’s January sales fell 23 percent below, or about 20,000 vehicles, below its internal target set before its Jan. 26 to halt sales of eight 2010 models until gas pedals are repaired.

“Dealers have been making all out efforts to fix the
vehicles brought in by customers,” Sasaki said. “That will result in
the resumption of sales. That’s why I don’t think it’s accurate to
extrapolate from the sales rate in the last week of January going
forward.”

The U.S. recalls involve mechanical repairs to a gas pedal on 2.3 million vehicles. Toyota
has acknowledged that pedals of some of those models may stick or fail
to return to idle position and contribute to the risk of unintended
acceleration. A separate recall covers about 5 million vehicles,
including some covered by the gas pedal recall. On those vehicles Toyota
is removing or replacing all-weather floor mats it has said can become
pinched in a way that engages the accelerator, another contributing
factor to the unintended acceleration problem.

Analysts also asked Sasaki why Toyota is so confident that no electronic malfunction contributed to the unintended acceleration problem.

“Not being an engineer myself, all I can do is
convey what I have heard from our engineers,” Sasaki said. “The
electronic throttle control system in our vehicles has many layers of
fail-safe mechanisms so there has been no evidence that sudden
acceleration has been caused by an electronic malfunction.”

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