Toyota Motor chief executive Akio Toyoda apologized Friday for those difficulties that led to the company’s recall of much more than 8 million autos. But he did not announce any solution for brake difficulties of its popular Prius hybrid.
Toyoda, the grandson of the company’s founder, made his first public appearance within the two weeks that the company has faced a growing crisis more than the security and high quality of its vehicles.
The recall affected 8.1 million vehicles worldwide and will price the company an estimated $2 billion in repair costs and lost revenue because of a sticking accelerator. Toyota has not said how much the new problems using the braking system in the Prius will cost it, though.
Toyoda stated an investigation from the Prius problems is under way and a decision on whether there are going to be an additional recall is going to be announced as soon as feasible.
The company also announced Friday it is searching at the brake systems of the latest Lexus hybrid autos as well as a Japanese design called the Sai — simply because they use the same system as the one about the 2010 Prius.
But Toyoda denied the company has been trying to hide problems with the brakes from security officials within the United States and Japan. Still, he admitted Toyota needed to do much more to assure clients about the safety of its autos.
“I feel we are in stormy weather,” he stated. “Under this situation, [we] must regain customer trust. Tackle the problem. My role is to carry it out. We lacked customer perspective. It’s extremely unfortunate.”
Not going far enough. But one expert said Toyota and its chief made a mistake by not announcing a recall for that Prius, particularly since it now is clear there’s an issue that will eventually require to become fixed.
“What we heard this morning was much more foot dragging,” stated Michelle Krebs, senior analyst for auto sales Web website Edmunds.com. “They nevertheless are not very forthcoming. I believe it’d be in their best interest to do a recalls, and get it all behind them.”
Other experts agreed that Toyota is suffering higher damage by not obtaining all the bad news out as quickly as possible. ”For reasons we might never learn, Toyota appears to be pulling their bandage very slowly, and therefore keeping their remember situation…firmly in the public eye,” stated James Bell, executive industry analyst for Kelley Blue Book.
Krebs said that whilst most Toyota customers appear to be staying loyal towards the brand for now, the harm getting done to its image could hit future revenue. She believes Toyota’s estimates of a loss of 80,000 sales in North America and another 20,000 in Europe due towards the recalls are probably too low.
“My impression is they’re fairly tone deaf about how significant this is within the U.S.,” she said. “I don’t believe they have a great sense of what it’s going to cost them in terms of reputation and revenue.”
She added that difficulties with the Prius are a particularly tough blow to Toyota — even though the number of hybrids affected is insignificant compared towards the 8.1 million autos recalled due towards the gas pedal concerns.
“The Prius is so essential to them. It is the pinnacle of their technological knowledge and engineering prowess. Now that image has been tarnished,” she said.
Toyoda has faced harsh criticism more than the last two weeks about his lack of public appearances throughout the crisis. Krebs said it was important for him to finally speak towards the public.
The tone of the news conference, which took place late Friday night in Japan, was extremely out of character with what is normally seen at corporate press conferences in Japan. Reporters did not show the typical deference to a top executive. Some demanded answers about why there’s no leadership and why the company was dodging questions.
Toyoda said the corporation would set up a committee to examine difficulties that led towards the recalls and said the corporation would cooperate with U.S. authorities who are looking into problems with Toyota vehicles.
“Believe me, Toyota’s cars are safe,” he stated.
No solution yet for brake problem. The company has admitted it had a problem using the software controlling the anti-lock braking system from the 2010 design yr Prius. The company said earlier this week that it has changed the software for cars produced because January, and it’s searching into what to do using the vehicles previously on the road.
Jesse Toprak, analyst with TrueCar.com, said the delay in announcing a recall for the Prius is a sign that fixing autos previously about the road won’t be as easy as fixing ones coming off the assembly line. But he stated Toyota would be much better off announcing the recall even if an answer isn’t finalized.
“Normally it would are better off to wait for a solution. It doesn’t assist your picture to say you do not know how to fix your own autos. But these aren’t normal times for Toyota,” he stated.
The 2010 design year Prius went on sale in the middle of last year. There are an estimated 37,000 of the cars on the road in the United States, and more than 200,000 worldwide. It’s the best-selling vehicle in Japan and Toyota’s fourth-best selling design within the U.S.
There are 124 reports of problems with the brakes about the Prius within the United States, according towards the National Highway Transportation Safety Administration, which Thursday announced it had launched a formal defect investigation into the car. There are reports of four accidents involving the Prius brakes, two of which had injuries, although there have been no reported fatalities.
Toyota, which achieved steady industry share growth in the United States due to its reputation of strong vehicle high quality and security, has been criticized by U.S. Transportation Secretary Ray LaHood for being slow to respond to the latest difficulties. LaHood said Toyota did not move on the accelerator recall until pushed to do so by U.S. safety officials.
The Prius brake issue causes a delay of about a second within the brakes engaging, but during a second a car traveling 60 M.P.H. can travel almost 100 feet.
While Toyota (TM) has far higher financial resources than most of its rivals, especially its U.S. rivals General Motors, Ford Motor (F, Fortune 500) and Chrysler Group, the high quality issues do pose a financial challenge for the corporation. Friday credit rating agency Standard & Poor’s placed its debt on credit watch, meaning it faces the risk of a downgrade that could raise its borrowing costs.
“Standard & Poor’s believes that these developments might affect the company’s reputation for high quality, weakening its competitive position,” it said within the announcement.