Recall may cost Toyota $5.5 billion image

According to some economic calculations made by a series of economic analysts, the enormous recall may cost Toyota 5.5 billion us dollars.

According to msnbc, Toyota estimated that the worldwide recall, now involving some 8.5 million cars, could cost up to 180 billion yen, or about $2 billion, with 100 billion yen for repairs and 80 billion yen in lost sales.
JP Morgan’s analists consider that recall may hit $5.5 billion.

Deutsche Securities estimates a 290 billion yen, or $3.2 billion, impact to earnings in the coming fiscal year, though analyst Kurt Sanger acknowledges that any attempt to quantify the impact involves an almost certain degree of error.

“We expect Toyota to respond aggressively to win back much of its lost market share, but it will come at a cost,” he said in a recent report.

There is also the effect of bad publicity, which made Toyota shares to go down from 17 percent before the recall to 13 percent.

Toyota still expects to post a net profit of 80 billion yen, or about $885 million, in the fiscal year ending March 31, a massive turnaround from a net loss last year of 437 billion yen.