Toyota Motor (TM) has revealed that it may halt new car launches this year if it is unable to be fully satisfied with correcting the accelerator problem that forced a mass recall of its vehicles. The cars that might be shelved include RAV4 2010, Auris 2010 and the Auris Hybrid.
However, the Japanese automaker is hopeful about regaining sales in North America in March after a sharp decline last month when the automaker suspended sales of 8 recalled models.
In January, Toyota suspended the sale of 8 models to correct sticking accelerator pedals. The models affected in the sales suspension were RAV4 crossover (2009–2010), Corolla (2009-2010), Matrix (2009–2010), Avalon (2005–2010), Camry (2007–2010), Highlander (2010), Tundra (2007–2010) and Sequoia (2008–2010). So far, Toyota has recalled 8.5 million vehicles.
In February, the automaker’s sales fell 9% to 100,027 vehicles. According to Autodata Corp., the automaker’s U.S. market share fell to 12.8%, the lowest since July 2005.
The latest string of recalls has no doubt hurt the reputation of the automaker. The company has been slapped with dozens of lawsuits due to the recall. The value of claims under the lawsuits is estimated to reach about $4 billion, reflecting an average loss of $600 per vehicle.
Kelley Blue Book — the largest automotive vehicle valuation company in the U.S. — which considered Toyota the best brand as per the resale value two months ago, has stated that its resale value is now worth $200 to $500 less per recalled model (a decline of 1%–3%).
Auto research website Edmunds.com estimated resale or trade-in values to fall up to 10% in the short term. Edmunds’ estimate for the trade-in value of a 2009 Toyota Camry has fallen 4%–6% to $13,967 while the 2009 Toyota Corolla has declined 6% to $11,233.
To regain consumer confidence, Toyota has been offering unprecedented discounts including zero-percent financing for five years on top-selling models such as the Camry. It will also offer attractive leasing terms and free maintenance for two years for Toyota loyals. Further, the automaker has apologized to the public in the U.S., Japan and China — its three biggest markets.
“TM” Free Stock Analysis: Buy? Sell? Hold?
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