TOKYO -(Dow Jones)- Toyota Motor Corp. (7203.TO) said Wednesday that it will recall 1.705 million vehicles worldwide due to faulty parts including defective fuel devices, giving the company's once-prestigious reputation for quality another black eye.
The Japanese auto maker said that 1.28 million vehicles in Japan and a combined 421,000 vehicles in North America, Europe and other markets, including nearly 245,000 Lexus sedans sold in the U.S. are subject to recall.
This is the third straight instance of Toyota starting the year with a safety warning affecting more than one million of its cars, minivans and SUVs. The company announced recalls of some 3.4 million vehicles in January of 2010 and 1.36 million vehicles in January of 2009, both among its biggest to date. The latest recall came just days after it claimed its title as the world's largest car maker for the third year in a row and threatens to tarnish anew its reputation among car buyers.
"Toyota has been using more common parts in its vehicles" in order to cut costs, said Koji Endo, an auto analyst at Tokyo-based independent auto industry boutique Advanced Research Japan. "But the flip side is that it makes it a lot easier to have a million-plus recall."
The company blamed defective fuel pipes and pumps affecting a number of Toyota vehicles along with a separate issue involving loose fuel pressure sensors that affects certain Lexus models. Both problems could lead to fuel leaks, Toyota said.
Over the past year the company has taken a series of steps to deal with the problems at the root of the recalls such as setting up a new global reporting line for safety issues, assigning 1,000 engineers to focus on quality issues and delaying the launch of new vehicles by four weeks to spot check them for potential glitches.
Toyota stressed that most of the models affected by the latest recall were produced prior to 2010 and that there have been no injuries or accidents reported related to the faulty parts. A Toyota spokeswoman explained the timing of Wednesday's announcements as coincidental and described the pair of recalls as separate issues.
Toyota subsidiary Daihatsu Motor Co. (7262.TO) also announced a recall on Wednesday affecting some 6,175 pick-up trucks sold in Japan as Toyota models. Daihatsu said this resulted from defective spare tire carriers mounted under the chassis.
Knocking the wind out of a 7.6% gain in the year through Tuesday, Toyota's shares fell 1.9% in trading on the Tokyo Stock Exchange. "With questions still lingering over whether Toyota can recover consumer confidence, this kind of a large-scale recall will be a drag on shares," says Yoshihiro Okumura, general manager at Chibagin Asset Management.
The Toyota-badged vehicles subject to the recall all were sold in markets outside of the U.S., including at total of 1.28 million units in Japan spread across 21 different models and dating back as far as 2000. That marked the largest number of cars being recalled announced in Japan in a single day, surpassing a 1.27 million vehicle recall issued by Toyota in 2005.
For its part, Toyota described Wednesday's announcements as three separate issues, which would make the biggest of those--a recall affecting 1.20 million vehicles sold in Japan--the second largest ever in the country.
The same problem affected 140,000 Avensis sedans and wagons produced at a British plant and sold in Germany, Russia, New Zealand and the U.K.
The other recall issue affects some 355,000 luxury sedans worldwide-mostly 245,000 Lexus brand vehicles sold in the U.S. The company described the problem as stemming from loose fuel pressure sensors attached to fuel pipes coated with Nickel Phosphorus plating, which may be susceptible to leaks.
The U.S. models targeted are Lexus GS 300/250 sedans and Lexus IS 250/350 sedans produced from 2006 through 2007 and 2006 through 2009, respectively.
One Toyota dealer in Osaka, which has sold some 300 units of the Japan-market Noah minivan subject to the recall, spent the day reaching out to customers by phone and mail.
"This is a result of our continuous checks that Toyota conducts even after cars are sold," said Atsuhiko Okazaki, an engineer at dealer."But it's better if we don't give this kind of trouble to our customers at all."
Okazaki said that since the recall is related to the fuel system, it could potentially be dangerous. He added that the possibility of a fire cannot be ruled out in the event of fuel leaks. He declined to estimate how much the repairs will cost to fix each car, but said it would require about 1.5 hours of work.
Toyota's largest ever recall in the U.S. came on Sept. 29, 2009 when it issued a safety advisory for owners of 3.8 million Lexus and Toyota vehicles sold in the U.S to replace floor mats that may have contributed to case of unintended acceleration.
The recalls over the past two years prompted the U.S. government to investigate Toyota's disclosure practices, which eventually led to fines totaling about $49 million, including a $32 million civil penalty levied by U.S. authorities on the company last month.
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