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Coming at the worst possible time for auto dealers, around the world it has been estimated that 7.7M Toyotas are to be recalled, 2.3N in the US, due to safety concerns related to sticking accelerator peddles.
There is nothing new in dealership service departments being tied up in recall and warranty work that often cripples their profitability but this comes at a time when service department performance has taken on far greater significance than ever before to bolster weak new car sales.
Toyota stopped selling the eight U.S. models, including the top-selling Camry, on Tuesday. It also announced that it will stop building them in the U.S. until the problem is fixed. Yahoo News
American component manufacturer CTS Corp appears to be at the centre of the problem with reports that the global recall tally on vehicles going mostly back to 2005 will exceed 2009 sales.
Toyota, which overtook US rival GM in 2008 as the world's largest automaker, issued its largest recall to date in early October to correct the separate floor mat problem.
It came after a California Highway Patrol officer and three members of his family were killed in a fiery crash when the accelerator pedal of their Lexus became entrapped in the floor mat. AFP
This is obviously a serious safety concern for many Toyota vehicle owners and dealership profitability will suffer while dealers overcome this setback.