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Toyota expected to lose 2010 market share, Ford could become No. 2

February 11, 2010 | 10:39 am

Ford Motor Co. could replace Toyota Motor Corp. as the second-biggest seller of autos in the United States this year because the string of massive recalls for acceleration and braking problems is starting to take its toll on the Japanese automaker and its reputation for selling sturdy and reliable cars, according to a new report., the Santa Monica automotive information company, predicted Thursday that Toyota would now loseAvalon a full percentage point of market share of U.S. auto sales this year.

Prior to the recalls of about 6 million cars in the U.S. in recent months, including its technology flagship Prius hybrid, Toyota was expected to account for about 17.6% of what many in the industry project will be 11.5-million vehicle sales in the U.S. this year.

Edmunds estimates that Toyota's share will fall below 16.5% as buyers look to other manufacturers.

"Their whole existence is based on the perception in the eyes of the consumer of high quality, high reliability and safe vehicles. If that goes away, they are like everyone else," said B. Craig Hutson, an analyst Gimme Credit, an independent corporate credit research firm.

It looks as though General Motors, Ford and Honda will garner the majority of the sales Toyota loses, the Edmunds report says. Nissan and Hyundai should also see extra sales. Ford is now expected to overtake Toyota as the second-biggest automaker in the U.S. market with an estimated 16.6% share. General Motors will remain the top seller with 18.1% of the market, according to Edmunds.

Some industry analysts believe that Toyota and other automakers underestimate how quickly negative news spreads in today's wired society and how rapidly that can damage brand image.

"Car companies, including Toyota, don’t really understand the cacophony of noise out there will affect them," said Jeremy Anwyl, chief executive of Edmunds.

He expects the Toyota recall episode could mark a change in how the auto industry builds cars. One result will be higher prices.

“Automakers may have no choice but to devote more resources to safety in the future. Cars may be equipped with more on-board diagnostic sensors, be subject to more testing and be built with higher quality parts," Anwyl said.

Meanwhile, less demand is translating into lower sales prices for Toyota products. On average, the price of  new Toyota models that are part of the recall have dipped by 0.5%, or $150, this year, according to Edmunds. Dealers are selling used vehicles subject to the Toyota recall for 3% less. And owners trading in their recalled models are collecting 6% less than before the recall was announced.

-- Jerry Hirsch

Photo: A 2011 Toyota Avalon sedan on stage at the Chicago Auto Show. Credit: Tim Boyle / Bloomberg News