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Toyota Recalls Expected to Cost Billions

February 3, 2010
1 min to read


The cost of Toyota Motor Corp.'s two high-profile recalls totaling 9 million vehicles may run as high as $2 billion, The Detroit News reported.

"It's definitely in the billions, and it includes the cost of fixing the problems and the additional incentives that Toyota will have to offer at least the rest of this year," Jesse Toprak, an analyst with auto pricing firm TrueCar.com, told the newspaper.

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The Japanese automaker also faces potentially huge costs associated with long-term damage to its reputation and litigation.

Toyota already has been forced to pump up sales incentives to attract buyers for the models that weren't affected by its Jan. 21 recall of 2.3 million vehicles to fix faulty pedals.

Toyota's sales slid in January after the company was obliged to stop selling models covered by the recall. In a costly move, the company also halted production of the eight models for a week.

Toyota may recoup some of the lost business, estimated at 20,000 vehicle sales in January, after fixing the pedals.

But the damage to its once sterling reputation could enable Toyota's Japanese rivals and resurgent Detroit automakers to grab some of its U.S. market share over time, Citigroup analyst Itay Michaeli told The Detroit News.

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