With a combined recall of over eight million vehicles worldwide, Toyota is now firmly entrenched in the public relations barrel. Those millions of recalled vehicles will hurt the Japanese automaker both in terms of the costs associated with the recall as well the overall loss of sales, which could total well over a billion dollars. But is Toyota the only automaker with the potential to lose out in this story? Honda Chief Financial Officer Yoichi Hojo apparently doesn't think so.

Honda's CFO told The Wall Street Journal that the Toyota recalls could hurt consumer's industry-wide perception of quality, adding "if customers start to harbor doubts, that would be problem for the whole industry." If Mr. Hoji's fears are realized, the quality perception gap could lead to the slowing of the auto industry recovery, which could hurt U.S., Korean, German and other Japanese automakers. Also unknown is if the recent pressure put on the National Highway Traffic Safety Administration will lead to tougher regulations for all automakers in the future.

And while Toyota is down and out right now, Hoji feels Honda will continue to refrain from tailoring incentives towards current Toyota owners, bucking the precedent set by GM, Ford and Hyundai. That doesn't mean Honda won't increase rebates, though, because inventories of Civic and Accord models are reportedly rising. Hoji said in the interview that Honda will increase second quarter incentives to about $1,400 per vehicle; $600 more than in the previous quarter, adding that he expects Honda's global operations to end fiscal 2009 (ending March 31) with a 265 billion yen profit ($2.96 billion in U.S. funds).



[Source: The Wall Street Journal - Sub. Req.]