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Toyota's Problems Not a Death Blow: Wilbur Ross

Tuesday, 2 Feb 2010 | 7:59 AM ET
Wilbur Ross
Wilbur Ross

Both Toyota and its suppliers are to blame for the massive recall that hurt the Japanese automaker's reputation, investor Wilbur Ross, WL Ross & Co. Chairman and CEO, told CNBC Tuesday.

But the company, which overtook General Motors to become the world's No. 1 carmaker in the first quarter of 2007, will recover from the blow, he added.

Sales of Toyota vehicles in the US, to be released later on Tuesday, are expected to show a sharp drop because of the sticking accelerator problems that forced the company to pull eight models out of showrooms.

Wilbur Ross on Toyota's Troubles
Wilbur Ross, chairman and CEO of WL Ross & Co., discusses the Toyota recall and what it means for the company and its suppliers.

As companies get to have more models and they expand geographically, they become harder and harder to manage, Ross said.

Toyota itself does not make the faulty accelerators or the slipping floor mats that were the subject of a previous recall but it must share the blame with its suppliers, according to Ross.

"The average consumer doesn't know the names of the supplier anyway, they know the name of the car," he said.

Recalls are likely to be recurring for other big companies, as they are more complex, Ross said.

"But I think the real question here is 'will the Detroit Three be able to profit from Toyota's troubles?'" he said, adding that US companies should seize their opportunity to grab market share.

Toyota's reputation was built on quality, and a second such recall would be a big problem, he said.

"I think if there were a second thing it would snowball," Ross said, but added the company will be able to take the blow.

"Oh, Toyota will recover. This is not a death blow," he said.

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