Washington/Tokyo: Toyota Motor Corporation faced US Congress scrutiny over its biggest ever safety recall as rival Honda Motor Company, tipped to gain from Toyota's woes, also said it would recall thousands of cars worldwide.
Honda said it would recall a total of 646,000 units of its Fit/Jazz and City models, including 140,000 in the United States, because of a faulty window switch, after a child died when fire broke out in a car last year.
The announcement came as investors, suppliers and consumers weighed the impact of an unprecedented halt in US production by Toyota, the world's No 1 automaker.
Honda's move, as well as Toyota's recall due to problems with unintended and dangerous acceleration, come at a bad time for the industry as it struggles to lure buyers back to showrooms after a sales slump that helped drag US rivals General Motors and Chrysler into bankruptcy.
In an unusual move, House Energy and Commerce Committee Chairman Henry Waxman said he would hold a hearing next month to consider how quickly and effectively Toyota responded to complaints about sticking pedals and slipping floormats.
"Like many consumers, I am concerned by the seriousness and scope of Toyota's recent recall announcements," Waxman said in a statement.
Knock-on effects
Toyota last week suspended North American sales and production of eight models including its best-selling Camry after regulatory pressure, and widened the recall to China and Europe.
A Toyota spokeswoman said the company was still checking on whether any vehicles are affected in Latin America, the Middle East and Africa.
Japan's largest company, studied for its devotion to quality, could recall about eight million vehicles in total — more than the number of cars and trucks it sold worldwide in 2009.
In Tokyo, some worried about the knock-on effects to Japan's image and economy.
"If Toyota has hard times, there's a high probability that also Japan will. Particularly, trade will suffer," said Takeo Namekata, a 62-year-old office worker.
Honda's recall added to concerns that the safety-conscious image of Japanese manufacturers would be threatened.
"The Japanese have built their image on reliability, the fact that they make bullet-proof vehicles," said IHS Global Insight analyst Carlos Da Silva.
"It's not that their vehicles are worse than the others, (the recalls are) just showing maybe that their vehicles are like the others. The race to cost cuts and the competition between all the brands is so fierce that even the mighty Japanese are doing things that are not as reliable as they were."
Suppliers were expected to see some fallout.
"If Toyota gets the flu, its suppliers will also be sneezing," said Kevin Chen, president of Gasgoo.com, a major Chinese auto parts trading platform, noting Toyota's hand-picked suppliers depend on the automaker for a living.
International supply companies were most at risk, said Tatsuya Mizuno, president of Mizuno Credit Advisory.
Analysts have estimated the sales halt could cost Toyota at least 50 billion yen (Dh2 billion) in operating profit a month.
Dealers to lose billions due to sales halt
US dealers who sell Toyota cars could lose as much as $2.47 billion (Dh9 billion) in combined monthly revenue because of the halt of sales of eight models, including the popular Camry and Corolla sedans.
The 1,234 Toyota brand dealers would miss out on $1.75 million to $2 million a month in revenue from new and used versions of the models that aren't allowed to be sold, said John McEleney, the chairman of the National Automobile Dealers Association and owner of McEleney Toyota in Clinton, Iowa.
"We've never really dealt with anything like this with any manufacturer," said McEleney, who also owns a Chevrolet dealership in Clinton.
Hyundai Motor Company has joined Ford Motor Company and General Motors Company in offering discounts to lure Toyota owners, while consumer website Edmunds.com said fewer shoppers are aiming to buy Toyotas. The company's US market share may fall to 14.7 per cent in January, its lowest since 2006.
