DETROIT/WASHINGTON (Reuters) –
Toyota Motor Corp said it will recall some 3.8 million vehicles in the United States because of the risk that a loose floormat could force down the accelerator, a problem suspected of causing crashes that have killed five people.
The recall includes the hot-selling Prius hybrid and would be the largest ever for Toyota, which has built a reputation for safety and quality that helped it surpass General Motors as the world's top automaker last year.
The recall also comes at a critical time for Toyota as it scrambles to squeeze spending to bounce back from record losses forecast this year amid a broad-based slump in car sales.
"This is an urgent matter," said U.S. Transportation Secretary Ray LaHood.
The U.S. government said it has received reports of 100 related incidents that include 17 crashes and five fatalities involving Toyota vehicles.
Toyota said it was too early to provide a cost estimate for the move. Deutsche Securities auto analyst Kurt Sanger estimated the cost at a modest 5-10 billion yen ($50-$100 million), saying the bigger worry was its image.
"Monetarily I wouldn't expect it to be a major issue for Toyota," he said, noting that labor costs, which typically make up the bulk of recalls, would likely be minimal.
"The bigger concern is reputational."
In Tokyo on Wednesday, Toyota shares were down 1.1 percent, underperforming a 0.2 percent fall in the main Nikkei average and a rise in rival Japanese car stocks.
"CAR REACHED 120 MPH"
Toyota spokesman Yuta Kaga in Tokyo said on Wednesday that the floormats subject to the recall are used only in vehicles sold in the United States.
The company is also checking whether the problem originates in the floormats or the process of placing them in the vehicles, he said, without naming the floormat supplier.
Toyota and U.S. safety regulators warned owners to remove all driver-side floormats from eight Toyota and Lexus models manufactured in the last six years as an immediate safety precaution.
Last month, an off-duty California state trooper and three members of his family were killed in the San Diego area in a crash of a 2009 Lexus ES350.
Before the crash, a passenger in the car had called 911 and told dispatchers that the accelerator was stuck and the car had reached 120 miles per hour (193 km per hour).
The recall will cover the Camry and Avalon sedans, the Prius hybrid, the Tacoma and Tundra pickup trucks and luxury Lexus models, the IS250, the IS350 and the ES350.
Toyota's largest previous recall was in 2005 for a problem with steering rods, covering about 900,000 vehicles.
The pending recall will be equivalent to about double Toyota's annual sales in the U.S. market.
"This is a negative issue and is going to cost (Toyota) very much. (It's) not good for advertising," said Yuuki Sakurai, CEO of Fukoku Capital Management in Japan.
"But I'm not worried much about this problem and whether it will remain a negative factor for Toyota in the long term. They can overcome it," he said.
Toyota's sweeping recall stems from a safety issue that has been under review for the past several years.
The National Highway Traffic Safety Administration closed an investigation into floormats in Toyota vehicles that began in 2007 and resulted in a recall of more than 50,000 cars.
That investigation, which focused on the Lexus ES350, concluded that grooves in the floormat could trap the accelerator if the mat was not secured with retaining hooks.
Federal investigators also found many owners were not aware that it takes three seconds to turn off the electronic ignition button that comes standard on that model and the Prius.
Many owners also complained that it was not obvious how to put a runaway vehicle in neutral because of the design of the Toyota gear panel.
One Toyota owner petitioned NHTSA in April of this year to begin a wider investigation, saying that anecdotal reports of unintended acceleration suggested the problem could not be explained only by the floormat problem.
NHTSA has not ruled on that request. One auto safety advocate said he also suspected that reported problems could have causes other than slipping floormats.
"Their response is that this is all floormats," Sean Kane, president of Safety Research & Strategies, a consulting and advocacy firm based in Rehoboth, Massachusetts, said of Toyota.
"That's not terribly surprising. They would like it to be floormats because that is an easily identifiable mechanical issue."
The San Diego Sheriff's Department has not completed its investigation into the off-duty trooper's crash. Federal safety investigators are also looking into the accident.
Toyota said it was waiting for a final report on the accident but wanted to act because of indications that a floormat may have been involved.
"Obviously the tragic accident in San Diego was certainly an eye opener for all of us and we've paid very, very diligent attention to moving forward to try to make sure none of us will be reliving that kind of a very tragic situation," Toyota spokesman Irv Miller said.
Toyota said it would issue specific recall notices as soon as it had a plan to address each of the models affected.
More details on the safety advisory, including the vehicles covered, are available at the Toyota website http://www.toyota.com. Drivers can also call Toyota at 1-800-331-4331 or Lexus at 1-800-255-3987.
(Additional reporting by Kevin Krolicki and Bernie Woodall in DETROIT, John Crawley in WASHINGTON, Yoshifumi Takemoto, Yumiko Nishitani, Kei Okamura, Colin Parrott and Chang-Ran Kim in TOKYO; Editing by Tim Dobbyn and Chris Gallagher)
LONDON (AFP) –
British retailer Marks and Spencer said Wednesday that sales improved in its second quarter, driven by revamped food, clothing and homeware products, but it remained cautious about the outlook.
In a trading update, Marks and Spencer -- a barometer of consumer sentiment in recession-hit Britain -- said total sales rose 2.7 percent in the 13 weeks to September 26, compared with the same period of the previous year.
"We are pleased to report continuing improvement in our performance. This demonstrates that the actions we are taking are working," said chairman Stuart Rose in a statement.
"Whilst there is more visibility in the marketplace and consumers appear more confident, we continue to be cautious about the outlook. We expect 2010 to be a tough year and we will continue to run the business accordingly."
That said, the retailer plans to hire an extra 20,000 seasonal workers for the Christmas period.
In its home market Britain, Marks and Spencer said sales increased by 1.9 percent. Its international division performed much better, with sales up 9.6 percent.
In response to the downturn, and in a bid to lure cash-strapped shoppers back from cheaper stores, the group has launched a budget range of food products, slashed capital spending and cut its shareholder dividend.
Earlier this year, Marks and Spencer said it would axe up to 1,230 jobs and shut 27 stores in Britain and elsewhere.
LONDON (Reuters) –
European shares look set to finish the third quarter with their best performance in nearly a decade on expectations of economic recovery while world stocks also rose strongly though not as much as in the previous period. The pan-European FTSEurofirst 300 (.FTEU3) index put on 0.4 percent on Wednesday and the MSCI world index added the same, while commodity prices were also firmer but the dollar fell against a basket of currencies.
"We're ticking higher on the last day of a strong quarter but investors remain a touch cautious ahead of the start of October, always a volatile month, and Friday's U.S. jobs report," said Mic Mills, senior trader at ETX Capital in London.
Equities have been rallying hard since early March as investors have become more confident about the prospects for economic recovery.
The European benchmark index is up more than 18 percent in July-September, on course to record its biggest quarterly rise since December 1999. It rose nearly 16 percent in the previous quarter but is still 38.5 percent below its peak in mid-2007.
Global stocks gained 17.6 percent this quarter after rising more than 21 percent in April-June, its best ever quarterly rise, while Britain's FTSE 100 (.FTSE) was set to register its best quarterly gains since the index was launched in 1984.
The corporate outlook has also showed some signs of revival, with the world economy recovering from its worst recession since the 1930s Great Depression.
British retailer Marks & Spencer (MKS.L) on Wednesday posted an improvement in its quarterly sales trend and raised its forecast for full-year profit margin, but cautioned 2010 was likely to be a tough year.
"GDP and earnings are still being upgraded, valuations are not horribly expensive and cash is still zero percent, we are in a sweet spot," said Khiem Do, head of Asia multi-asset group at Baring Asset Management.
Crude prices were higher, rising above $67 a barrel as the dollar eased, while investors are focusing on talks over Iran's nuclear plans.
Metal prices also stayed firm, helped by the weaker dollar. Gold was poised to post its best quarterly performance since the first quarter of 2008.
The U.S. dollar (.DXY) slipped against major currencies on month- and quarter-end buying lifting sterling and the yen. The greenback was down 0.4 percent at 89.76 yen.
The euro held firm ahead of the European Central Bank's one-year cash tender results. Attention will focus on the amount of liquidity pumped into the system.
Lacklustre demand would strengthen the ECB's belief that money markets are on the mend, But strong demand would mean levels of cash held by banks remain at exceptionally high levels until the middle of next year, unless the ECB takes steps to drain it from the market.
The Australian dollar, which has been on the uptrend after recent market talk about an imminent rate hike lifts its yield allure, received a further boost as data showed consumers continue spending even as the stimulus programme nears its end. The Aussie dollar was up 1 percent at $0.8795.
Yields on benchmark 10-year U.S. Treasuries were up 2 basis points at 3.316 percent, while the 10-year euro zone Bund yield was up 1 basis points at 3.232 percent.
(Additional reporting by Jon Hopkins and Jamie McGeever in London and Umesh Desai in Hong Kong, editing by Mike Peacock)