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Toyota projects $2B in recall damages
Toyota Prius on display at company headquarters in Tokyo.
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TEXT OF INTERVIEW
Steve Chiotakis: Toyota says a design flaw was to blame for complaints about the braking system in its new Prius. A Toyota executive told reporters today the problem has been fixed. But it's just the latest in a string of woes for the company. Another massive safety recall with its gas pedals, and that could cost up to $2 billion. Marketplace's Amy Scott is with us live from our bureau in New York. Good morning, Amy.
Amy Scott: Good morning, Steve.
Chiotakis: What's Toyota saying about this latest problem with the Prius?
Scott: Well the company held a press conference in Tokyo today, and acknowledged that it had discovered an issue with the anti-lock brakes system in its 2010 Prius. The flaw apparently could cause brakes to become temporarily unresponsive. Toyota says it's fixed the problems in models sold since January, late January, and it's figuring out what to do about people who bought cars before then. And it's just come out that U.S. safety regulators have opened a formal investigation.
Chiotakis: Hmmmm, and we have this price tag now, Amy, for the separate gas pedal recall announced last month. Toyota is saying it's going to cost a couple billion dollars, right? I mean, how is Toyota going to turn this around?
Scott: Well, believe it or not, the company still expects to make a profit this year. But the brand has taken a big hit. I talked to analyst Aaron Bragman at IHS Global Insight. he says in addition to fixing these safety problems, they're going to have to make a big marketing push.
Aaron Bragman: The core loyal buyer at Toyota is the baby boomer generation. And while they've been trying to branch out into younger generations from there, that's really their base. And I think really they need to get back to their base, they need to play to their base, or they really risk losing quite a number of buyers.
But it may be a while before we stop talking about this, before Toyota is out of the headlines. Congressional hearings start next week, and Bragman suspects more issues are going to come out in that process.
Chiotakis: Marketplace's Amy Scott, joining us from New York. Thanks, Amy.
Scott: Thank you.
About the author
Steve Chiotakis was the host of Marketplace Morning Report until January 2012.
$2 billion… how is Toyota going to turn this around?
Well, they could ask Bernanke to give their finance division Bank Holding Company status like GMAC (the BHC money bailed out Cerberus' stake in GMAC) and get immediate access to the Fed’s discount lending window and a few billion dollars at zero percent. If they were really audacious they could, like Goldman Sachs et al, ask Bernanke for Financial Holding Company status so there would be no regulatory strings attached. Since the crisis the Fed has been handing out these classifications and money quite freely. American Express Travel Related Services even got BHC status.
Perhaps if we taxpayers formed our own pseudo financial services corporation we too could get some free money instead of paying it to the oligarchs and other Friends of the Power Elite?
I heard about the pedal recall I had no idea it affected my NON toyota car good thing I found more info here http://www.carpedalrecall.com
searched for my make, model, year and found my car had been recalled so look out! it could save a life maybe yours
don't understandhow seriousor what the car pedal recall is about?
just watch this video at the end it also shows how to stop a out of control car very useful
http://www.youtube.com/watch?v=NGe3EOJ-CMY
