Toyota to restart U.S. plants next week

[NINETY EIGHT REGENCY]

Toyota to restart U.S. plants next week

February 1, 2010 15:31 CET

TOKYO/DETROIT (Reuters) -- Toyota Motor Corp. said U.S. production of eight models involved in a safety recall would resume on Feb. 8, as it detailed plans to fix 2.4 million vehicles and sought to salvage its reputation with a public relations blitz.

The recall, which covers almost 1.9 million cars in Europe and China that use faulty accelerator pedals, has spread to some PSA/Peugeot Citroen minicars -- the Peugeot 107 and Citroen C1 -- made at a joint Toyota-PSA factory in the Czech Republic.

Toyota, whose reputation for quality and reliability helped it overtake General Motors Co. as the world's largest carmaker, is facing criticism for moving too slowly to address a fault that causes unintended and dangerous acceleration.

But on Monday the company said it was confident it had found a fix for 2.4 million vehicles, and could resume production of eight models, including the best-selling Camry, on Feb. 8.

Including recalls in Europe and China, 8 million Toyota vehicles are up for repair globally, including a separate problem involving floor mats and pedals.

The carmaker said it would install a steel reinforcement bar at U.S. Toyota dealerships this week. Sources said on Friday a smooth rollout of the fix could lead to a resumption of sales of models including the Camry in the third week of February.

Hiroaki Osakabe, a fund manager at Chibagin Asset management, said: "This (recall) was expanded across the globe and has really put Toyota under the spotlight."

"This could hurt Toyota's brand image, and there's definitely concern about a longer-term damage to the image ... It could also affect Toyota's overall competitiveness."

More trouble?

Referring to the Toyota and Peugeot recalls, Societe Generale analysts said the debacle did not call into question carmakers' strategy of sharing costs by using joint platforms and parts across several models.

"If you weigh up the risks and the rewards, it's worth exposing yourself to the risks, which remain minimal, from time to time."

Toyota said on Monday an unknown number of vehicles in the Middle East were also fitted with defective accelerators, but the problems seen elsewhere were unlikely to occur there because of the difference in climate.

Toyota said it was studying the necessary remedy for the two models in the Middle East.

Fears of a heavy and protracted blow to Toyota's sales and bottom line have knocked about $20 billion from its market value in the last week.

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