Special Coverage

Toyota's Safety Crisis

Based on fourth-quarter 2009’s daily selling rate, a 2-week sales ban on eight Toyota models flagged for safety concerns could trim 40,740 deliveries from the auto maker’s balance sheet, according to a Ward’s estimate.

Toyota Motor Sales U.S.A. Inc. has instructed its dealers not to sell the ’10 Avalon, Camry, Corolla and Matrix passenger cars and the RAV4, Highlander, Sequoia and Tundra light trucks. The move was prompted by a recall with implications for some 2.3 million of these and previous model-year units with the same nameplates.

A potential problem with sticky accelerator pedals prompted the recall last week. Toyota implemented the sales ban late Tuesday.

In addition, dealers are being told not to sell used vehicles implicated by the recall until a fix is developed.

Toyota also has announced it will stop production of the recalled models Feb. 1.

Per-day lost sales could be 2,500 units, based on January’s forecasted DSR and the mix of affected vehicles.

The eight model lines now banned from sale accounted for 65.8% of the Toyota brand’s total 1.5 million deliveries in 2009.

In December, the affected models contributed 108,554 sales to TMSUSA’s 187,860-unit tally for the month.

Toyota says it does not know how long the sales halt will last. The auto maker is working on a fix for implementation as soon as possible.

“This action is necessary until a remedy is finalized,” Bob Carter, Toyota Div. group vice president and general manager says in a statement. “We’re making every effort to address this situation for our customers as quickly as possible.”

Hit hardest by a possible 2-week halt in sales would be the Camry, America’s best-selling car for nine years running. Toyota could lose 13,380 Camry sales if the ban lasts two weeks, according to Ward’s data. The auto maker sold 356,824 Camrys in 2009.

Toyota will continue selling Camry Hybrids, which are not affected by last week’s recall.

The Corolla, Toyota’s second-best seller in the U.S. last year, along with its Matrix hatchback platform-mate, could see sales depleted by 11,652 units over a 2-week period.

The production stoppage affects plants in Cambridge, ON, Canada; Princeton, IN; San Antonio and one line at its site in Georgetown, KY. Also halted will be the Camry line at partner Fuji Heavy Industries Ltd.’s Subaru plant in Lafayette, IN.

The production stoppage is set for one week, Toyota says, ending Feb. 5.

Based on Toyota’s previously announced February production forecast of 119,104 builds for North America, a 1-week shutdown at the five plants will remove 21,667 units, or 18.2%, from the auto maker’s schedule, Ward’s estimates.

However, Toyota could lessen the impact by scheduling increased production of models not affected by the recall or sales stoppage.

Toyota could opt to build more Lexus RX 350 cross/utility vehicles at its Cambridge plant, home to the Matrix. In Georgetown, KY, the auto maker could produce more Venza CUVs.

Halting sales no doubt will bloat inventories at distribution centers and on dealer lots.

Toyota had 271,562 units in inventory at the end of December, a 40 days’ supply, Ward’s data shows. The recalled vehicles accounted for more than half of that total – 148,419.

Of those recalled vehicles, the Corolla/Matrix had the highest inventory at 57,216 vehicles, including 55,277 domestic units.

Camry had second-highest stock level at the end of December with 49,677 units. All but 616 were assembled in the U.S.

The Sequoia large SUV accounted for the lowest inventory among the recalled vehicles at 1,744.

In Washington, National Highway Traffic Safety Admin. chief David Strickland endorses the auto maker’s actions.

“Toyota and my enforcement staff have been in regular communication,and Toyota’s decision was an aggressive one and one that is legally and morally correct to do,” Strickland tells Ward’s.

– with James M. Amend in Washington

cschweinsberg@wardsauto.com