Ford reported its car sales were up in January, but Toyota lost big after announcing a global recall of 4.6 million cars.
Ford reported its car sales were up in January, but Toyota lost big after announcing a global recall of 4.6 million cars. Tony Dejak/AP
Toyota Motor Corp. reported a 16 percent drop in U.S. sales in January after a massive recall and temporary sales halt kept prospective buyers from the showroom floors.
Ford Motor Co., General Motors Co. and Nissan Motor Co. may have benefited from Toyota's woes, with each posting strong gains. Ford reported a 25 percent increase; Nissan's sales were up 16 percent; and GM saw a 14 percent rise because of higher fleet and crossover vehicle sales. Crossovers are similar in size to SUVs, but they're on a car frame.
Korea's Kia Motors reported its sales were flat last month. Honda Motor Co. saw a 5 percent drop, and Chrysler Group LLC sales fell 8 percent.
Sales to rental car companies and other fleet customers pushed Ford sales upward. Retail sales to consumers dipped 5 percent, Ford said.
Historically, January is a weak month for U.S. auto sales, but carmakers were expecting an improvement over last year when the poor economy drove sales to a 26-year low.
Speaking to reporters at the company's headquarters in the city of Nagoya, Toyota's executive vice president, Shinichi Sasaki, said the recall in several markets may cause more damage than previous quality control issues because of its enormous scale.
The company has recalled nearly 4.6 million vehicles in several markets and temporarily halted sales of eight models — including the popular Camry and Corolla. As a result, Toyota sales fell below 100,000 a month for the first time in more than a decade.
"This is unprecedented in having caused this huge problem for customers," he said, adding that annual sales targets may be in jeopardy. The company is due to report third-quarter earnings on Thursday.
Last month, Toyota predicted global sales would rise 6 percent, but the estimate did not factor in the impact on sales or cost of the recalls.
Toyota's shares on the Tokyo exchange have plummeted in the past week, and the company faces lawsuits by U.S. consumers who allege the company ignored evidence of defects in its vehicles.
The company announced last week it would recall about 2.3 million vehicles in the U.S. — and stop selling some models — because of a problem with a sticking accelerator pedal. That announcement came on the heels of a previous recall of millions of vehicles because of floor mats that caught on gas pedals.
The company plans to fix the sticking gas pedals by installing a steel bar in the pedal assembly to eliminate excess friction between two pieces of the accelerator mechanism. Toyota said the repair will take about 30 minutes per vehicle.
On Tuesday, Transportation Secretary Ray LaHood criticized Toyota for being "a little safety deaf" for failing to realize the seriousness of accelerator pedal problems.
LaHood told The Associated Press that the Toyota recall is one of the most pressing safety issues he has faced as secretary.
Sasaki's comments were the first made by Toyota's leadership since the recalls were announced. Akio Toyoda, company president and grandson of the founder, has yet to formally comment on the company's problems.
Jessica Caldwell, a senior analyst for Edmunds.com, said the way the dealerships handle the repairs will be a big factor in whether Toyota retains or loses its customers.
"The dealership is really going to make or break Toyota in how they handle these recalls," Caldwell said. "Especially with something safety-related, you have to treat people well."
Caldwell said that from the consumer's standpoint, the accelerator problem and the gas pedals sticking in the floor mats will be viewed as one incident because of their proximity to one another. Because Toyota has had a good track record for safety and reliability, she predicts customers will be willing to give the automaker another chance.
"Even with Johnson & Johnson and [tainted] Tylenol — people still buy Tylenol. I think Toyota will bounce back," Caldwell said.
Dealers were expected to begin receiving repair kits for the sticking accelerator pedals late Tuesday.
Tammy Darvish, head of Darcars Toyota in Silver Spring, Md., said she and some other dealers plan to stay open around the clock to make repairs once they receive the parts.
In addition to the accelerator problems, the National Highway Traffic Safety Administration is looking into the possibility that there is an electronics problem in the vehicles being recalled. A Toyota executive has said the company investigated that claim and found nothing.
As U.S. automakers try to cash in by encouraging Toyota owners to trade their cars in for new, U.S.-built vehicles, Caldwell urged drivers to put the brakes on their emotions.
"Anyone trying to trade in a Toyota — my advice would be, 'Don't do it!'" she said, adding that Toyotas will be undervalued right now. "Wait until after the fix has been done. Toyota prices will inevitably rebound."
Jim Lentz, head of Toyota's U.S. division, has admitted the recalls are embarrassing. He spent much of Monday trying to shore up customer confidence in the brand in interviews with the media.
On NPR's All Things Considered, Lentz said the reinforced accelerator pedals that dealerships will begin installing on affected vehicles this week are safe.
"I drive Toyota products, my wife drives Toyota products, my family drives Toyota products, friends and neighbors drive Toyota products, and I can tell you that I wouldn't have loved ones in our products if I didn't think they were safe," Lentz said.
He said the company is concentrating on trying to make the repair process quick and painless for customers. "We want to get the customers back on the road with the fix as quickly as we possibly can," he said.
Reported and written by Deborah Tedford, with additional reporting by NPR's Anthony Kuhn, Louisa Lim and Frank Langfitt and including material from The Associated Press