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US Congress to probe Toyota recalls

Friday, 29 January 2010

29 Jan 2010;economictimes.indiatimes.com:WASHINGTON/DETROIT: Congressional investigators on Thursday sought documents on Thursday from Toyota Motor Corp and US safety regulators about a pair of safety recalls the automaker was racing to address. House Energy and Commerce Committee Chairman Henry Waxman said he would hold a hearing next month to consider "how quickly and effectively" the car maker responded to complaints about unintended and dangerous acceleration. "Like many consumers, I am concerned by the seriousness and scope of Toyota's recent recall announcements," Waxman said in a statement. The unusual action by the US government comes just hours after the Toyota recall for accelerator problems was widened to include China and Europe. The world's largest automaker and a company studied for its devotion to quality, Toyota has recalled about 8 million vehicles in recent months -more than the number of cars and trucks it sold worldwide in 2009. The recalls rank as the largest ever for Toyota. Analysts say the financial impact will depend on how long the safety problems shut production and whether Toyota's famously loyal customers begin to abandon the brand. Shares of Toyota have dropped 17 percent over the past week. The stock was down 1.5 percent in early Tokyo trading on Friday. "If I sat down to write the worst thing that could happen to Toyota, it would be very close to what is happening to them now," said Gerald Meyers, a University of Michigan business professor and veteran auto executive. "They are at the edge of a collapse of confidence in their products," said Meyers. "That means their brand is in jeopardy. If they lose their brand they lose the battle. That's why it's close to being as bad as it could get." Ratings agency Fitch, placing Toyota on watch negative, said the recalls and production suspension damaged Toyota's reputation for quality and could hamper its recovery. Toyota's troubles come as rivals Ford Motor Co and Hyundai Motor Co announced fourth-quarter results that beat analyst expectations. Both automakers lead a pack of rivals expected to gain ground from Toyota's missteps.