Toyota recall update: dealers face full lots, anxious customers
As the Toyota recall grows to 9 million cars worldwide, dealers in America handhold worried customers and brace for losses of up to $2 million a month.
With Toyota suspending sales of eight models this week due to flawed gas pedals, dealerships across the country are feeling the pain with lost revenue, panicked customers, and discouraged sales staff.
US Toyota dealers may lose as much as $2.47 billion in combined monthly revenue from the halt in sales of both new and used versions of those models, according to a Bloomberg news report. John McEleney, chairman of the National Automobile Dealers Association and a Toyota dealer, told Bloomberg that each of the 1,234 Toyota dealers in the US could lose out on $1.75 million to $2 million a month in revenue.
‚ÄúIt ripples through,‚ÄĚ says Robert Boch, co-owner of Expressway Toyota in Dorchester, Mass. ‚ÄúWhen they say ‚Äėby building a car you employ 50 people,‚Äô well, you certainly feel it now. From the plant to the finance company to sales people, we‚Äôve all been affected."
Persisting problems with accelerator pedals getting stuck led Toyota to suspend sales of certain vehicle models earlier this week, including the popular Camry and Corolla sedans. Toyota had already recalled 2.3 million sold vehicles since last week.
As the recall grows worldwide to 9 million vehicles, Toyota announced it had figured out how to fix the sticky pedals and is already sending new gas pedal systems to car factories, according to Toyota‚Äôs website. It will reveal how it plans to fix faulty pedals next week, and expects repairs to be completed within a month.
Some dealerships have been hit especially hard.
Of the 209 new vehicles on Mr. Boch‚Äôs lot in Dorchester, 128 had faulty pedals and were not sellable.
‚ÄúThe recall affected 60 percent of our new car business,‚ÄĚ Boch says. He estimates January sales will be off 25 percent due to the sales suspension. ‚ÄúThree of our best-sellers have been Camry, Corolla, and RAV4, and all may be affected [by the recall].‚ÄĚ
‚ÄúCamry and Corolla are our volume-selling vehicles,‚ÄĚ Mr. Tufankjian says.
The recall also forced some dealers and their sales staff to play counselor to hundreds of worried customers.
‚ÄúA lot of the work this week has been educating customers,‚ÄĚ says Boch. ‚ÄúEmpathetic conversations. A lot of hand-holding, explaining. There hasn‚Äôt been a dull moment.‚ÄĚ
Toyota hasn‚Äôt yet released a fix for the problem, so Boch eases customer concerns with offers of free visual inspections and test-drives for those with affected vehicles. His technicians have been trained to spot sticky pedals.
‚ÄúWe did 25 test-drives yesterday,‚ÄĚ he says. ‚ÄúAt least it gives [customers] peace of mind.‚ÄĚ
While there may be a lull in new car sales, dealers such as Boch are gearing up for a surge in repair work once a fix is released. Boch expects his dealership to be operating on a 24/7 schedule to repair the 200 new cars on the lot, in addition to the thousands of affected cars in his area.
‚Äú[Customers are] saying ‚ÄėWell, gee, the one pillar Toyota built its brand on was reliability, quality,‚Äô ‚ÄĚ says Aaron Bragman, a an automotive research analyst at IHS Global Insight. ‚ÄúNow that quality is questionable, and suddenly they‚Äôre looking at the Hyundai dealer across the street.‚ÄĚ
‚ÄúCompetitors have caught up to Toyota very visibly,‚ÄĚ he adds. ‚ÄúThat‚Äôs dangerous for Toyota in the long-term.‚ÄĚ
Some General Motors, Ford, and Hyundai dealerships have started offering discounts and no-interest financing for Toyota owners.
‚ÄúWe‚Äôll see some Toyota clients getting worried. We hope we‚Äôll be able to reap some benefits from it, ‚ÄĚ says Sean Picotte, sales manager at Colonial Buick Pontiac GMC of Watertown, Mass. ‚ÄúWe always welcome business from our competitors.‚ÄĚ
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