Toyota could delay new models

Report: Recalls and quality issues may slow rollout by as much as six months.
August 25 2006: 6:08 AM EDT


TOKYO (Reuters) -- Toyota Motor Corp., Japan's biggest auto maker, is considering delaying the introduction of some new models by as much as half a year amid a series of recalls and quality problems, the Wall Street Journal said Friday, citing people familiar with the matter.

Toyota, which has built its reputation on offering safe and reliable cars at reasonable prices, is plagued with a rise in vehicle recalls and faces a legal probe into its past recall practice.

"I have given an order to pay more attention on safety issues, but we as a company are not stalling," Toyota President Katsuaki Watanabe told reporters on the sidelines of a safety technology briefing in Shizuoka Prefecture, west of Tokyo.

"We always work flexibly on each model though," he added.

On the same day, China's quality watchdog said Toyota would recall over 20,000 locally made cars in the country due to a faulty rubber seal used to fix the windscreen, although no accidents or injuries had yet been linked to the defect.

The paper said Toyota is considering adding as much as three to six months to development lead time, which is usually two to three years to improve quality, affecting a relatively wide range of projects.

The next Sienna minivan, Solara sports coupe and Avalon sedan are among models that could be affected, it said.

Toyota spokeswoman Shiori Hashimoto said the company would not comment on its strategy and the timing of product introductions.

So far this year, Toyota has recalled more than one million vehicles in Japan and 627,000 units in the United States, its single-biggest market.

It is also being investigated by prosecutors in Kumamoto, southern Japan, over whether its quality-control managers wrongly delayed a recall filing that could have prevented a road accident in 2004 that injured a couple and their three young children.

Mitsubishi UFJ Securities analyst Shotaro Noguchi said financial impact from the quality issues would likely be limited for Toyota.

"We are not expecting any surprise in earnings from all this," he said. "It is a fact that Toyota has been busy in investments, so it is good to take time to check."

Toyota has forecast group-based global sales of 8.85 million units and production of 9.06 million units for 2006 -- figures that could soon see it overtake General Motors Corp. as the world's biggest auto maker.

Vehicle recalls have been on the rise at most auto makers as they use common components across more models to save costs, and pile on advanced features requiring more electronics parts to add value to their products. Shares in Toyota fell 1 percent to close at ¥ 6,250, underperforming a 0.1 percent decrease in the Nikkei average.