Toyota recalls could cost company more than $5.5 billion

The massive world-wide recalls issued by Toyota were no doubt costly. Assigning a final figure, however, may be a daunting task. The figure released by Toyota on Feb. 4 puts the total cost of the situation at about 180 billion yen, or about $2 billion. 100 billion of those yen were for repairs, and the other 80 represents sales lost due to either the halt in sales or because of dwindled consumer confidence.Deutsche Securities estimates a 290 billion yen, or $3.2 billion hit to earning in FY 2010, though it is impossible to quantify a number like that with any degree of accuracy.

Toyota also seems to have left their stingy ways behind and has recently announced new deals to bring consumers back into American showrooms. In addition to zero-percent financing, they are offering two years of free maintenance to existing customers who return. 89 class-action suits have been filed against Toyota, which could add $3 billion or more to the company’s expenses.

Toyota’s U.S. market share is expected to fall to about 13 percent. Overall, it is expected that the result will be 144,900 fewer cars sold and $3.3 billion in lost sales.

– By: Stephen Calogera

Source: MSNBC