Toyota (TM) Recalling 1 Million More Vehicles
January 28, 2010 2:02 PM
The shares of Toyota Motor Corp. (NYSE: TM) took another hit today when the company announced that it would recall another 1 million vehicles.
During the last two months, Toyota has already issued a recall of 4.3 million vehicles, as well as halted the sales and production of 8 models.
The latest recall covers vehicles sold in Europe. The cause of the recalls are problems with the accelerator mechanism and with floor mats that block accelerator pedals.
Toyota's North American division said on Wednesday that it's been working together with supplier CTS Corp. (NYSE: CTS) on a "revised design" that fixes the accelerator pedal problems.
Although the tarnishing of the Toyota brand will cost the automaker, some analysts are downplaying the long term consequences.
"The earnings impact of the sales suspension is hard to gauge, as the actual duration of the suspension is unknown at this time," Goldman Sachs' (NYSE: GS) analysts wrote in a note to clients early Thursday.
"We see this having a limited negative impact near-term, given past cases of Toyota using recalls as an opportunity to forge closer customer relationships and enhance customer satisfaction," the Goldman Sachs said.
