Toyota (TM) Could See $5B in Costs Due to Recent Recalls
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According to a Wall Street Journal article today, total costs that Toyota (NYSE: TM) could experience over the next year due to their recent recalls could top the $5 billion mark.
The considerations takes into account the possible incentive campaigns, litigation costs, and marketing efforts that the recently beleaguered company could be facing to regain its favored stance in the U.S. market, arguably the largest auto market on the planet currently.
The auto maker is recently launched a 0% interest five-year loan offer, made its leases more competitive, and offered free maintenance across 80% of its current vehicle line-up [editors note: maybe roadside assistance would be more effective...for when you're "on the run."].
Toyota, however, only gave up 130 basis points [about 1.3%] of market share in January, amid all the recall bedlam.
Although it is for the prior quarter, and maybe as a sign of the recent strengthening of the economy, Toyota is set to report a net income of 80 billion yen, or about $887 million, for the year ended March 31, 2010. This is a drastic swing from the 437 billion yen loss reported for the same period in 2009.
Toyota has anticipated a loss already, and currently is accounting for about 180 billion yen of loss for FY10. At today's exchange rate, though, $5 billion comes to about 448 billion yen, about 3x what Toyota is currently planning for.
CNW research, an automotive research company, sees Toyota losing 7% of consumers that previously intended to purchase a vehicle from the company.
To counter any losses, however, Toyota currently has about $29 billion in cash handy, coupled with low levels of borrowing. Its a formidable defense, but how long can the cash last if market share is permanently dinged?
Today, the company hit another pothole, as a driver in California, of a 2008 Prius, when the driver experienced unintended acceleration and had to be helped to a stop by local San Diego police. No one was injured in the incident. The 2008 model Prius had already been recalled by the company as part of their "sticky gas pedal" campaign.
The considerations takes into account the possible incentive campaigns, litigation costs, and marketing efforts that the recently beleaguered company could be facing to regain its favored stance in the U.S. market, arguably the largest auto market on the planet currently.
The auto maker is recently launched a 0% interest five-year loan offer, made its leases more competitive, and offered free maintenance across 80% of its current vehicle line-up [editors note: maybe roadside assistance would be more effective...for when you're "on the run."].
Toyota, however, only gave up 130 basis points [about 1.3%] of market share in January, amid all the recall bedlam.
Although it is for the prior quarter, and maybe as a sign of the recent strengthening of the economy, Toyota is set to report a net income of 80 billion yen, or about $887 million, for the year ended March 31, 2010. This is a drastic swing from the 437 billion yen loss reported for the same period in 2009.
Toyota has anticipated a loss already, and currently is accounting for about 180 billion yen of loss for FY10. At today's exchange rate, though, $5 billion comes to about 448 billion yen, about 3x what Toyota is currently planning for.
CNW research, an automotive research company, sees Toyota losing 7% of consumers that previously intended to purchase a vehicle from the company.
To counter any losses, however, Toyota currently has about $29 billion in cash handy, coupled with low levels of borrowing. Its a formidable defense, but how long can the cash last if market share is permanently dinged?
Today, the company hit another pothole, as a driver in California, of a 2008 Prius, when the driver experienced unintended acceleration and had to be helped to a stop by local San Diego police. No one was injured in the incident. The 2008 model Prius had already been recalled by the company as part of their "sticky gas pedal" campaign.
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