TOKYO – A massive global recall, mounting legal bills and a battered reputation add up to a very expensive problem for Toyota.
TOKYO – A massive global recall, mounting legal bills and a battered reputation add up to a very expensive problem for Toyota. How expensive? Depends who you ask. With new developments emerging almost daily, predicting a final price tag for the Japanese automaker is a daunting calculation that only some analysts have attempted. The sole figure from Toyota itself came on Feb. 4 along with the company’s October-December earnings results. It estimated that the worldwide recall, now involving some 8.5 million cars, could cost up to $2 billion. It said the recalls may dent global demand for Toyota models by 100,000 vehicles. Analysts with their own estimates say the total is bound to climb higher. JP Morgan’s Kohei Takahashi expects Toyota to take a one-time $5.5 billion hit, including recall-related costs and litigation settlements. He has lowered his estimate for operating profit next fiscal year starting April to $5.9 billion, as higher profit margins in emerging markets soften the blow of recall expenses. Deutsche Securities estimates a $3.2 billion impact to earnings in the coming fiscal year, though analyst Kurt Sanger acknowledges that any attempt to quantify the impact involves an almost certain degree of error. "We expect Toyota to respond aggressively to win back much of its lost market share, but it will come at a cost," he said in a recent report. AP