How Bad Would Another Recall Be For Toyota?

As the National Highway Traffic Safety Administration and Toyota look into whether or not complaints of steering problems in 2009 and 2010 Corollas merit a recall, it’s worth investigating both the potential financial and public relations costs for the auto giant.

In terms of sheer numbers, a Corolla recall would account for around 500,000 cars. That’s a blip on the radar when compared to the 8-million vehicle albatross currently dangling from Toyota’s neck.

Experts estimate the cost of such a recall would cost Toyota somewhere around $55-65 million. And while that is a substantial amount of money, it’s a manageable dent in the wallet to a company with more than $200 billion in annual revenue.

Where Toyota needs to worry is in the arena of public perception. The Corolla is Toyota’s second most popular vehicle in terms of U.S. sales, outpaced only by its Camry.

Corollas were already included in the current, massive recall to fix faulty accelerator pedals. For a car that has often been labeled as one of the more dependable vehicles on the road, having its name attached to a second, unrelated recall could only do further damage.

“Recalling the flagship model over and over again could damage Toyota’s brand,” said Koji Endo, an auto analyst at Advanced Research Japan. “I am afraid its customers might leave for rival cars.”

As reported ealier this week, Toyota is researching programs to combat sagging sales in the face of the ongoing recall. While car sales in the U.S. were up as a whole in January, Toyota’s figures were down a whopping 16 percent.


Toyota image seen at further risk in Corolla probe [Reuters]

Toyota Corolla steering problems could result in another recall [Consumer Reports]