Toyota woes a boon for car rivals

General Motors, the U.S. giant which was toppled by Toyota as the world's biggest car maker in 2008 and went through a humiliating bankruptcy last year, is taking the lead, offering Toyota owners money to buy GM models instead.

But as Toyota's woes mount other auto giants are also waiting in the wings, with Europe's biggest car maker, Volkswagen (VW), this week reiterating its plan to overtake Toyota as the largest car producer in the world by 2018.

“It's a very huge number (of recalls) and it's a very real problem for them, which means they are going to lose market share... especially in the U.S., but also in Europe,” said Frank Schwope, an auto analyst at German bank NordLB.

“The other mass producers will profit from it, for example VW, for example Nissan or Honda... but also Ford and also GM will profit from it,” he said.

“They lost big market share, the Americans, but they will regain some.”

General Motors, which is now 61-percent government-owned, last month said it was offering Toyota drivers in the U.S. a 1,000-dollar (722-euro) discount if they traded in their Toyotas to buy GM following the first signs of trouble.

“Dealers have been getting a lot of queries from customers who have expressed worries about their Toyota vehicles,” a GM spokesman told AFP then.

“So we want to be able to take advantage of that interest.”

Toyota's problems have spiraled in recent days with the recall of eight million vehicles because of feared technical faults and a patchy public relations operation seen by many experts as further fueling fears. U.S. authorities worsened Toyota's ordeal on Thursday by ordering a formal investigation into reported braking problems in the 2010 Toyota Prius.

Toyota had sold nearly 1.5 million Prius vehicles in 40 countries since the first version's launch in 1997, making it the world's most popular hybrid car.

Toyota has said the recalls could cost it two billion dollars but insists it is on course to making 80 billion yen (US$898 million, 653 million euros) this fiscal year after posting a net profit in the last three months of 2009.

IHS Global Insight analysts Ian Fletcher and Aaron Bragman warned, however, that “the sales impact from potential customers could be devastating” if Toyota is not seen to be frank and forthcoming over the technical faults.

Peter Morici, a professor at the University of Maryland's business school, meanwhile said U.S. government criticism of Toyota could be interpreted as favoritism for U.S. manufacturers in which the state holds major stakes.

“The optics are terrible because — and this is what happens when a government owns a company — the two companies that are going to gain the most out of this are General Motors and Chrysler,” he said.

Sales figures in the United States at least partly bear his point out.

Toyota sales plunged 16 percent in January on a 12-month comparison, while General Motors rose 14 percent and Ford gained 25 percent. But sales for Chrysler, which also underwent bankruptcy, last year, fell by eight percent.

“In the next few months (Toyota) sales will be negatively affected in the U.S.,” said Ferdinand Dudenhoeffer from the German auto research institute CAR, adding that Toyota needed to give “more orderly information to the public.”

Asked about beneficiaries, he said: “In the U.S., it's of course the American companies. GM, Ford and a little bit Chrysler. But we also see the chance of other Japanese, Korean and German car makers to profit from that defect.”

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