Toyota's Biggest Fear Isn't Recalls, It Is A Stronger Yen

The big danger for Toyota isn't the cost of the massive U.S. recall to replace gas pedals, but instead shrinking income from the surging yen, a top executive said today.

Toyota Motor Corp. Executive Vice President Yukitoshi Funo acknowledged the cost was considerable for replacing gas pedals on about 4 million vehicles to prevent a problem of floor mats getting stuck and possibly causing sudden acceleration.

The recall, announced last week, was Toyota's largest in the U.S.

But Funo shrugged that off, noting that the expense was dwarfed by other costs such as incentives and advertising.

"The effect on our business is not so big," he said at Toyota's Tokyo office, while declining to give a specific number. "It's not the factor that determines whether we stay in the black or not."

Funo, in contrast, was visibly alarmed by the recent surge of the yen. The dollar fell to a 14-year low of 84.81 last week, although it has recovered moderately to about 88 yen.

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