While Toyota hasn't disclosed the impact from the production and sales halt, along with related recalls in Europe and China, the company's market value has dropped 18%, or 2.55 trillion yen, ($28.2 billion) since it issued a second recall for the sudden acceleration problems on Jan. 21.
Kurt Sanger, car analyst at Deutsche Bank in Tokyo, says Toyota has halted production on about 60% of its North American manufacturing capacity and the sales stoppage of eight models could cost the company up to 18,600 units of sales per week.
"We think it's a 100 billion yen [$1.1 billion] problem," said Mr. Sanger.
The immediate impact of Toyota Motor Corp.'s recalls and sales stoppages is estimated to cost the company around $1 billion, but the longer-term damage to the auto maker's hitherto impeccable brand is set to be much larger unless the world's biggest car maker acts swiftly to contain the fallout.Analysts say damage to Toyota's brand could require the company to spend on advertising, sales incentives and possible legal bills.
Toyota began Monday to publicly discuss consumer concerns over sudden acceleration of its vehicles, following nearly a week of silence. It took out newspaper ads explaining the situation in major U.S. markets, and the head of its U.S. sales arm, Jim Lentz, began a round of television interviews. In Japan, the company is slated to hold its first press conference on the recall on Tuesday."Almost every company has to deal with a recall, the issue is what you do after," said Shoichi Yoshikawa, a branding expert and managing director at public relations agency Hill & Knowlton Inc. in Tokyo. "By putting off the issue, the company's brand value steadily goes one way: down."
Automotive Lease Guide, a Santa Barbara, California-based company tracking the residual value of cars and brand values, believes Toyota's perceived quality score could fall 20%, leading to a 4% drop in the residual value of its cars, if it doesn't resolve the situation quickly and without further recalls. Toyota may have to put aside more reserves if the value of autos coming off leases declines. A fall in residual value also decreases the amount of money consumers get at trade-in or when they try to resell a used car.
A drop in brand value, according to Mr. Yoshikawa, is determined through a combination of factors including sales declines and stock price falls.
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