Quotebox: Analysts on impact of Toyota’s sales suspension

DETROIT (BestGrowthStock) – Toyota Motor Corp suspended sales of some of its best-selling vehicles in the United States due to problems with a faulty accelerator, a damaging blow to its reputation for quality that helped it surpass General Motors as the world’s top automaker in 2008.

Here are some comments from industry analysts on the impact of Toyota’s decision to suspend sales of eight models subject to a safety recall, and halt production of the models in North America for at least the first week of February.

The Camry and Corolla sedans, the top two best-selling cars in the U.S. market, are among the vehicles affected by the move.

JAKE FISHER, AUTOMOTIVE ENGINEER, CONSUMER REPORTS

“It can take years or even decades to build a reputation for quality and reliability, but only a single event like this can erode it.

“I think this is going to be very difficult to overcome. There are so many good choices out there for consumers to pick right now when we still have so much overproduction. This could definitely have some long-term effects for them.

“Toyota is trying very hard to do the right thing and being bold and having large recalls to portray the fact that they are willing to stop at nothing and spare no expense so nobody gets hurt in their vehicles.

“But they had issued recall after recall. They’ve talked first about the floor mats and the pedals that are too long and now they are talking about pedals that stick. They are really not quite sure what is the underlying problem.

“Toyota has built this reputation on quality and reliability and safety and being a practical choice. When consumers start questioning that, it really can damage them in terms of reputation, especially when Hyundai, Ford, Honda, Subaru and Nissan offer great choices and are coming up in quality ratings.”

BRIAN JOHNSON, ANALYST, BARCLAYS CAPITAL

“Based on conversations we had with Toyota, it doesn’t look like Toyota has come up with a definite fix for the problem yet, so the initial announcement of a one-week plant closure could potentially be followed by more.

“We expect that the suspension in deliveries of these eight models will negatively impact late January and February U.S. sales for Toyota, but boost sales of these models’ most direct competitors.”

DENNIS VIRAG, PRESIDENT OF AUTOMOTIVE CONSULTING GROUP

“It’s a devastating blow to Toyota and Toyota’s reputation. Toyota is the new General Motors in terms of experiencing quality glitches, over-expansion and the proliferation of new product models.

“Toyota has been too aggressive and perhaps complacent in terms of focus on quality. They can’t concentrate on the details with so many models.”

KURT SANGER, ANALYST, DEUTSCHE SECURITIES

“You can’t just stop selling these models and not expect some impact to your market share — at least in the short term.

“Will it help certain brands gain share in the short term? Yes. I’m sure every Hyundai dealer in the U.S. is letting customers know about their improvement in quality, and by the way, ‘Guess what happened across the street?'”

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(Reporting by Bernie Woodall, Soyoung Kim, Kevin Krolicki, editing by Matthew Lewis)

Quotebox: Analysts on impact of Toyota’s sales suspension