Toyota to Recall Lexus Models in U.S., Japan for Engine Flaws
Visitors look at Toyota Motor Corp.'s Lexus LS600hL hybrid vehicle at the company's showroom in Tokyo. Photographer: Haruyoshi Yamaguchi/Bloomberg
Toyota Motor Corp. plans to recall Lexus models in the U.S. as well as Japan after saying engines in as many as 270,000 vehicles worldwide may have defective valve components that can lead to stalling.
The automaker will notify U.S. regulators of the recall next week, according to a statement yesterday. The company will inform Japan’s transport ministry on July 5, Ririko Takeuchi, a spokeswoman, said earlier yesterday by phone. Model years affected are 2006, 2007 and 2008, depending on the vehicle.
Toyota, the world’s largest automaker, is working to restore its reputation for quality after recalling about 8 million vehicles globally for defects linked to unintended acceleration. The company recalled about 13,000 Lexus GX 460 sport-utility vehicles in April after Consumer Reports labeled the model a “safety risk” because it could roll over. The designation was removed in May.
“Toyota’s latest recall may further fuel the carmaker’s drop in market share in the U.S.,” said Masatoshi Nishimoto, a Tokyo-based analyst at consulting company IHS Automotive. “While sales are rising as the market recovers from the recession, they are already losing share to U.S. and other Asian carmakers.”
Toyota’s U.S. sales rose 6.8 percent in June from a year earlier, compared with Hyundai Motor Co.’s 35 percent surge. Toyota’s market share may drop to as low as 15 percent this year from 16.9 percent in 2009, IHS Automotive estimates.
The U.S. National Highway Traffic Safety Administration said it hasn’t received official notification of the recall.
“Toyota will take similar required action in the other markets where these vehicles are sold,” said Paul Nolasco, a spokesman.
‘Abnormal’ Noise, Stalling
About 90,000 vehicles in Japan and 138,000 in the U.S. may have engine problems ranging from “abnormal” noise and idling to stalling while the vehicle is moving, according to the company.
As many as eight models may be affected by the latest flaw, Takeuchi said. The models are the Lexus GS 350, GS 450h, GS 460, IS 350, LS 460, LS 600h and LS 600hL, and the Toyota Crown, according to the company.
“Due to slight variations during the manufacturing process, some foreign material may have contaminated the valve springs, resulting in potential breakage,” Toyota said on its website.
The latest recall may cost the carmaker 20 billion yen ($228 million), the Asahi newspaper reported. Takeuchi declined to comment on the potential cost.
‘Backbone Models’
Koji Endo, an analyst at Advanced Research Japan in Tokyo, said the recall may cost about 10 billion yen. “Lexus cars are Toyota’s backbone models and the most expensive,” he said. “The amount won’t hurt Toyota so much, but Toyota’s brand will hurt as Lexus models are its most high-end.”
Toyota shares rose 0.3 percent yesterday to close at 3,020 yen in Tokyo. Toyota’s American depositary receipts, each equal to two ordinary shares, fell 44 cents to $68.23 in New York Stock Exchange composite trading.
The engine problem may result from “contaminated materials used in valve springs,” Mark Templin, U.S. group vice president and general manager of the Lexus brand, said July 1 on a conference call. “We want to take care of customers better than anybody and take care of this as quickly as possible.”
The Toyota City, Japan-based company said last week it would recall hybrid Lexus HS250h sedans because of a fuel-leak risk.
Toyota, which paid a record U.S. fine of $16.4 million this year for not complying with auto-safety regulations, said June 25 it would recall the HS250h after too much gasoline spilled in U.S. government crash tests, posing a fire risk.
The company also said it completed repairs on more than 4 million, or 78 percent, of U.S. vehicles recalled this year for flaws linked to unintended acceleration, Bob Carter, U.S. group vice president, said on a conference call yesterday.
To contact the reporters on this story: Alan Ohnsman in Los Angeles at aohnsman@bloomberg.net; Takako Iwatani in Tokyo at tiwatani@bloomberg.net
Rate this Page