Toyota projects $2B in recall damages
TEXT OF INTERVIEW
Steve Chiotakis: Toyota says a design flaw was to blame for complaints about the braking system in its new Prius. A Toyota executive told reporters today the problem has been fixed. But it’s just the latest in a string of woes for the company. Another massive safety recall with its gas pedals, and that could cost up to $2 billion. Marketplace’s Amy Scott is with us live from our bureau in New York. Good morning, Amy.
Amy Scott: Good morning, Steve.
Chiotakis: What’s Toyota saying about this latest problem with the Prius?
Scott: Well the company held a press conference in Tokyo today, and acknowledged that it had discovered an issue with the anti-lock brakes system in its 2010 Prius. The flaw apparently could cause brakes to become temporarily unresponsive. Toyota says it’s fixed the problems in models sold since January, late January, and it’s figuring out what to do about people who bought cars before then. And it’s just come out that U.S. safety regulators have opened a formal investigation.
Chiotakis: Hmmmm, and we have this price tag now, Amy, for the separate gas pedal recall announced last month. Toyota is saying it’s going to cost a couple billion dollars, right? I mean, how is Toyota going to turn this around?
Scott: Well, believe it or not, the company still expects to make a profit this year. But the brand has taken a big hit. I talked to analyst Aaron Bragman at IHS Global Insight. he says in addition to fixing these safety problems, they’re going to have to make a big marketing push.
Aaron Bragman: The core loyal buyer at Toyota is the baby boomer generation. And while they’ve been trying to branch out into younger generations from there, that’s really their base. And I think really they need to get back to their base, they need to play to their base, or they really risk losing quite a number of buyers.
But it may be a while before we stop talking about this, before Toyota is out of the headlines. Congressional hearings start next week, and Bragman suspects more issues are going to come out in that process.
Chiotakis: Marketplace’s Amy Scott, joining us from New York. Thanks, Amy.
Scott: Thank you.
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