DETROIT (Reuters) - Toyota Motor Corp suspended sales of some of its most popular models in the key U.S. market due to problems with a faulty accelerator, sending shares of the automaker and industry partners sharply lower.
Analysts warn that this could be a lasting blow to a once sterling reputation for quality and safety that helped Toyota surpass General Motors Co as the world’s top automaker in 2008.
Here are some details on Toyota’s decision to suspend sales, which follows its January 21 recall of 2.3 million vehicles in the U.S. market.
* Toyota is temporarily suspending sales of eight models involved in last week’s recall: 2009-2010 RAV4, 2009-2010 Corolla, 2009-2010 Matrix, 2005-2010 Avalon, 2007-2010 Camry, 2010 Highlander, 2007-2010 Tundra, 2008-2010 Sequoia.
The Camry and Corolla sedans are the top two best-selling cars in the U.S. market. Combined, those eight models sold 1,008,611 units last year, representing 57 percent of Toyota’s 2009 U.S. sales.
* In a related move, Toyota will halt production of the models for at least the first week of February while it seeks to finalize a remedy for the safety crisis.
Five North America assembly facilities in Texas, Kentucky, Indiana and Canada are affected by the decision.
BarClays Capital analyst Brian Johnson said in a research note on Wednesday it does not appear that Toyota has come up with a definite fix for the problem yet, raising the likelihood that the one-week plant closure could be followed by more.
* The faulty accelerator pedals used on Toyota’s eight vehicle models were made by CTS Corp.
The Elkhart, Indiana-based supplier said it was continuing to supply Toyota with pedals made at its plants in Streetsville, Ontario, and was in talks with Toyota about a remedy for the problem.
CTS, which has supplied Toyota with auto parts since 2005, has annual sales of about $600 million. Toyota makes up about 3 percent of its sales and the pedals make up almost all of its business with Toyota.
* The U.S. safety regulators said they were in continuing talks with Toyota. Dealers have a legal obligation to not sell any vehicle identified as defective until the problem is fixed, the National Highway Traffic Safety Administration said.
A source briefed on the matter told Reuters that Toyota has discussed offering inventory financing support to its U.S. dealers affected by the sales suspension.
* The move comes at a time when major automakers are ramping up output as the battered U.S. industry recovers from its worst downturn since the recession of the early 1980s.
Analysts expect the suspension will hurt Toyota’s U.S. sales in late January and February and boost sales of rivals that directly compete with Toyota in the affected segments.
BarClays’ Johnson estimated that the sales suspension could give a temporary market share boost of 2.4 percent to General Motors Co, 2.1 percent to Honda Motor Co and 1.6 percent to Ford Motor Co.
Reporting by Soyoung Kim; Editing by Gary Hill