While Toyota Motor Corp. engineers race to come up with a fix for faulty accelerator pedals that have sidelined sales of eight Toyota models, the company's dealers in the United States are bleeding bushels of cash. One estimate puts the total loss as high as $2.47 billion in monthly sales.
The National Automobile Dealers Association estimates that individual Toyota dealers will lose anywhere from $1.75 to $2 million in monthly revenue while sales are halted on the popular Camry and Corolla sedans plus six other models.
NADA President John McEleney, owner of McEleney Toyota in Clinton, Iowa, told Bloomberg News, "We’ve never really dealt with anything like this with any manufacturer."
Automotive industry watcher Edmunds.com's Web site states estimates that Toyota's share of the U.S. market will fall to 14.7 percent in January, its lowest level in four years. A sales slump in the U.S., Toyota's largest market, will also hurt the company as a whole as it seeks to return to profitability after posting a loss of 461 billion yen last year. The loss was Toyota's first in 59 years.
Competitors, including Ford and General Motors, are offering discounts to lure Toyota buyers to their product lines. Meanwhile, Toyota dealers are spending more time fielding calls from existing customers about the company's product recall than they are selling the models not affected by it, further depressing revenue.
Some of the losses may be recouped by required repair work once Toyota engineers devise a replacement or repair for the accelerator pedals, which may remain in the depressed position due to friction. Warranty repairs can be highly profitable for dealers, which usually charge $75 or more an hour for labor. Marc Cannon, spokesman for AutoNation, the country's largest Toyota franchisee, was quoted in the Bloomberg News report as saying his dealers could gross anywhere from $100 to $150 in profit for each repair job.
Written by Sandy Smith
For HULIQ.com
Sources: Bloomberg.com, Wall Street Journal
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