WRAPUP 3-Toyota braces for sales hit from recall

(For more on Toyota’s recall, click [ID:nN27231388])

* Toyota HQ makes first comments on recall problems

* Shares rally 4.5 pct after plan for accelerator fix

* Costs for recall, lost output $1 bln-$2 bln – analysts

* Doubts remain over legal, incentive, other costs – analyst

* PSA says 2 cases of possible pedal problem, no accidents

(Adds detail from PSA on its own recall)

By Chang-Ran Kim and Soyoung Kim

NAGOYA/DETROIT, Feb 2 (BestGrowthStock) – Toyota Motor’s (7203.T: )
unprecedented recall of millions of vehicles with accelerator
problems is taking a toll on sales and may force the world’s
largest automaker to cut 2010 sales forecasts.

U.S. auto sales figures 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 complaints over sticking accelerator pedals.

In the first public comment from an executive at Toyota’s
head office, the company’s executive in charge of quality said
he was expecting a sales hit from the recall.

“The sales forecast is something that we’re extremely
worried about,” Executive Vice President Shinichi Sasaki told a
news conference. The company will report its third-quarter
earnings on Thursday.

On top of a separate recall for slipping floormats, also
linked to unintended acceleration, some 8.1 million Toyota
vehicles are now being recalled, more than its total group sales
last year.

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

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.

The company’s U.S. head, Jim Lentz, appeared on TV on Monday
and also expressed his regret as part of a public relations
blitz in Toyota’s largest market.


Meanwhile, Europe’s No.2 carmaker PSA Peugeot Citroen
(PEUP.PA: ) said it would discuss with Toyota in coming days how
to proceed with its own recall of just under 97,000 Citroen C1s
and Peugeot 107s, built on the same assembly lines as Toyota’s
Aygo at a joint plant in the Czech Republic.

The spokesman confirmed PSA cars used the same pedal as
Toyota and said two cases that could potentially be linked to a
sticking accelerator pedal had been reported around the end of
2009 and the start of 2010, but the link was not confirmed.

“We haven’t had any accidents reported in our network,” the
spokesman stressed.

The spokesman said he could not say how much the recall
campaign would cost, nor how long it would take.

“Decisions about recall campaigns are made jointly, so
during this meeting with Toyota we’ll decide on the details of
the campaign, the type of repair that will be carried out and
when the campaign can be launched,” he told Reuters.

Toyota detailed its plans on Monday to fix the faulty pedals
on at least 4.2 million vehicles in North America and Europe
with a small metal spacer to prevent sticking.

Toyota said it would restart production on Feb. 8 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. [ID:nTOE61007K]

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 would 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 4.5 percent in Tokyo on Tuesday
following the company’s U.S. announcement on the fix and restart
of production.

The jump in its shares comes after about an 18 percent
tumble over the last seven business days that wiped out more
than $20 billion in market capitalisation. A weaker yen also
boosted shares, some investors said.


Toyota faces a growing number of lawsuits claiming it and
its U.S. supplier CTS Corp (CTS.N: ) endangered drivers by not
acting sooner to fix problems with faulty accelerator pedals.

Lawsuits announced on Monday in the U.S. 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 [GM.UL], Ford Motor Co
(F.N: ) and Hyundai Motor Co (005380.KS: ) have been offering
discounts targeting Toyota customers.

Stock Market Report

(Additional reporting by Yumiko Nishitani, Elaine Lies, Mayumi
Negishi and Helen Massy-Beresford; Writing by Lincoln Feast;
Editing by Jean Yoon and Rupert Winchester)
($1=90.87 Yen)

WRAPUP 3-Toyota braces for sales hit from recall