Toyota braces for sales hit from recall; costs mount

Toyota Motor's unprecedented recall of millions of vehicles with faulty accelerators is taking a toll on sales and may force the world's largest automaker to cut 2010 sales forecasts.

US auto sales for January due later on Tuesday are expected to show a sharp drop for Toyota after it pulled eight of its most popular models from showrooms last week following a series of crashes linked to unintended acceleration. 

In the first public comment from an executive at Toyota's head office, the company's executive in charge of quality said there had been a bigger-than-usual impact from the recall.

"The sales forecast is something that we're extremely worried about," executive vice president Shinichi Sasaki he told a news conference in the central Japanese city of Nagoya.

"Already, I am hearing that sales have been affected somewhat in January," he added, noting the company will report its third-quarter earnings on Thursday.

Although Toyota says the occurrence of problems is rare, public confidence is being shaken by coverage of saga, including the harrowing details of the crash of a Lexus blamed on a stuck accelerator that killed an off-duty California state-trooper and three members of his family last year.                                           

Sasaki, who appeared alone in front of more than 100 reporters, offered no deep bow of apology as has been seen at other ''scandal''-related media conferences in Japan. Koji Endo, director at Advanced Research Japan, said there had been a lack of communication from the top of Toyota.                                           

"I've never seen Toyota like this. Until recently, they had a culture of acting swiftly to problems. But the impression I get now is that PR is not functioning very properly."                                           

Toyota President Akio Toyoda, the grandson of the company's founder, has not formally addressed the public or media on the recall problems. While in Davos, Switzerland last weekend, he appeared briefly on broadcaster NHK and apologised to consumers.                                                                                  

SALES MONITORED                                          
The world's largest automaker detailed its plans on Monday to fix the faulty pedals with a small metal shim, or spacer, to prevent them from sticking. On top of a separate recall for slipping floormats also linked to unintended acceleration, almost 8 million vehicles worldwide are being recalled.                                           

Toyota said it would restart on February 8 production of the eight models including its popular Camry, Corolla and Rav4 models after an unprecedented one-week shutdown at six plants in the United States and Canada.                                            

Sasaki said costs were not taken into account with the recall and said they would monitor sales before reviewing their 2010 forecast.

Toyota last month forecast global auto sales to rise 6 percent this year but has since said that did not take the impact of the recalls into account.                                           

The costs for the recall and the shutdown now look to come to roughly 100 billion yen to 200 billion yen ($1.1 billion to $2.2 billion), two analysts estimated.                                           

"It's a positive that we now can grasp what the direct costs might be, but Toyota has yet to address uncertainties about indirect costs, such as litigation costs and costs of incentives to win back customers," said JP Morgan analyst Kohei Takahashi.

"The size of these indirect costs is of far greater importance" for Toyota's future, he said.  Shares in Toyota rallied almost 5 percent in Tokyo on Tuesday following the company's US announcement on the fix and restart for production.                                           

The jump in its shares comes after about an 18 percent tumble over the last seven business days. A weaker yen also boosted shares, some investors said.                                             

LAWSUITS, DELAYS                                           
Toyota faces a growing number of lawsuits claiming it and its US supplier CTS Corp endangered drivers by not acting sooner to fix problems with faulty accelerator pedals.                                           

Lawsuits announced on Monday in the US claimed Toyota had ignored signs of trouble with some of its top-selling models. The suits are part of what is expected to be a wave of litigation against the automaker for claims ranging from losses on car resale values to injury and death.                                           

Analysts and dealers said it would take months for the automaker to fix all of the vehicles at risk of having an accelerator pedal stick in the open position.

Rivals such as General Motors Co, Ford Motor Co and Hyundai Motor Co have been offering discounts targeting Toyota customers.