Toyota’s pedal recall expected to give competitors an edge in tightening European market

Toyota’s fall from grace likely softer in Europe

MILAN — Toyota’s fall from grace may be hardest in the United States, but a global brake pedal recall that has stained its once-pristine reputation for quality is likely to help competitors cut into Toyota’s European market share.

Toyota has always been a niche player in Europe. But the biggest crisis to strike the global giant in memory could give brands such as Volkswagen, General Motor’s Opel and South Korea’s Hyundai and Kia room to nudge into Toyota’s European business, according to Ferdinand Dudenhoeffer of the Center for Automotive Research in Germany.

“A lot of people thought that Toyota was like the pope: they can never fail,” Dudenhoeffer said Friday. “Now they failed on a big issue.”

At least in Germany, Toyota had already lost some of its shine as competitors like Volkswagen increased their quality, he said.

“Now we see they have not just a problem with the competition, but with their own technology,” Dudenhoeffer said.

Toyota grabbed a 5 percent share of the European car market last year with sales of 730,831, according to the European Automobile Manufacturer’s Association. Sales were down 4.7 percent from a year earlier, when Toyota sold 766,884 cars for a slightly larger 5.2 percent market share.

Car manufacturers are also facing the grim reality that Europeans are expected to buy 2 million less vehicles in 2010.

Ian Fletcher, an analyst with IHS Global Insight in London, thinks the reaction in Europe will be blunted compared with that in the United States, where Toyota’s fall from grace might be as notable as Tiger Woods’ image-destroying extramarital trysts, with both leaving consumers to wonder: Was it just too good to be true?

But that could change, Fletcher said, if the situation escalates and the European Union or national governments get involved in the Toyota recall, as has happened in the United States. So far in Europe, there have been no reports of fatal crashes from faulty brakes that have mobilized public outrage.

Toyota never enjoyed the same level of success in Europe as the United States, largely because in Europe the market is still dominated by many national manufacturers like Fiat in Italy, Volkswagen in Germany and Renault and PSA Peugeot Citroen in France — all of which make smaller cars like Toyota.

“In America, they brought in smaller cars and went up against the land yachts,” Fletcher said, adding that Toyota’s success spiked with the fuel crisis that shifted the American market toward cheaper-running cars.

Because the pedal maker that provided the defective part is a global supplier, Toyota models sold in Europe — which are made in Europe or imported from Japan — also are being checked. Fletcher said as many as 1.8 million cars in Europe may be affected, from eight model ranges including the Aygo iQ, Yaris, Corolla and Rav4.

New parts to replace the defective ones are expected to arrive in Europe next week.

“This is an anno horribilis for Toyota. After 20, 30, 40 years of having such good luck, and such good strategy, it will knock the wind out of them,” Fletcher said.