Auto Racing

TOKYO — Toyota Motor Corp. on Friday sharply downgraded its earnings forecast for this fiscal year through March, blaming a strong yen and the massive flooding in Thailand.

Japan’s biggest automaker expects to book a net profit of 180 billion yen ($2.3 billion), down 54 per cent from the 390 billion yen it projected in August. It estimates leaner revenue of 18.2 trillion yen ($234.36 billion) from 19 trillion yen.

Toyota expects to sell 7.38 million vehicles worldwide this year instead of 7.6 million it predicted four months ago.

The maker of the Camry and Corolla sedans is on track to lose its title as the world’s largest automaker this calendar year. Toyota sank to No. 3 in vehicle sales during the first six months, trailing U.S. rival General Motors Co. and Volkswagen AG of Germany.

Toyota held off from releasing new earnings forecasts when it announced its first-half earnings results last month, citing uncertainties from the Thai floods that disrupted parts supplies.

It’s been a rough year for Japanese carmakers, who were first hit with the earthquake and tsunami in March. They had largely rebounded from the disaster when they confronted the immense flooding in Thailand this autumn. Car production as far away as North America was scaled back as the creeping flood waters put suppliers out of action.

The flooding, which was Thailand’s worst in half a century, will result in an output loss of 230,000 vehicles, said Executive Vice-President Satoshi Ozawa at a news conference in Tokyo.

He told reporters the company had learned from its experience this year and that it would study ways to ensure that such unforeseen events “never again” lead to paralysis of supply chains.

But among Japan’s carmakers, Honda Motor Co. has been the worst hit by the floods. It has yet to release forecasts as a result.

Compounding the pain is a strong yen, which hit multiple historic highs against the dollar this year. With jitters about European and U.S. economies, global investors have turned to the yen as a relative safe haven.

For exporters like Toyota, a strong yen reduces the value of overseas profits when repatriated and makes Japanese products less competitive on prices in markets outside Japan. Exports are a key driver of economic growth in a country that faces a rapidly aging and shrinking population at home.

Japanese manufacturers, including car and high-tech makers, responded by shifting more production abroad — a trend that has government officials and the business community concerned about a hollowing out of Japanese industry.

“Because of the strong yen, the collapse of the foundation of Japanese manufacturing has begun,” Ozawa said.

Toyota’s new forecasts incorporate a 120 billion yen hit on operating profit from the Thai floods and another 190 billion yen from the negative impact of currency levels.

It now sees operating profit of 200 billion yen, compared with 450 billion yen in its August forecast.

The company lowered its foreign exchange assumptions to account for the yen’s appreciation over the last several months. It expects the yen to average 78 to the dollar this year, from 80 yen to the dollar in its previous estimate. It assumes 109 yen against the euro, down from 116 yen to the euro.

DETROIT, MI —The liquid solution that cools the Chevrolet Volt’s batteries is the likely cause of fires that broke out inside the electric car after government crash tests, a person briefed on the matter said.

Engineers at General Motors Co., which makes the much-celebrated car, are working on structural changes to strengthen the car’s T-shaped battery pack, the person said. They are also looking at ways to bolster the Volt’s body to make it more resistant to side-impact crashes.

The coolant did not catch fire, but crystallized and created an electrical short that apparently sparked the fires, said the person, who asked not to be identified because the findings are not final.

On Nov. 25, the National Highway Traffic Safety Administration opened an investigation into Volt battery fires, which occurred from seven days to three weeks after crash tests by the agency. NHTSA spokeswoman Lynda Tran would not comment on the investigation Tuesday evening.

The chemical reaction that stores and discharges energy from the battery is not the culprit, and engineers believe that if they can stop the coolant from leaking, they can stop the fires, the person said.

Also Tuesday, Transportation Secretary Ray LaHood, whose agency includes NHTSA, told reporters that the Volt is safe to drive even though the government is investigating the fires. NHTSA is interested in setting up procedures for safely dealing with electric cars after crashes.

Transportation officials launched their investigation after a Volt that was damaged in a crash test caught fire at a test facility in Wisconsin in June. The blaze occurred three weeks after a side-impact crash test, and the car had been left out in the elements after the test. Investigators then tried to duplicate the fires by similarly damaging two Volt battery packs. Both set off fires.

GM has said that no Volts have caught fire in real-world crashes. The company is notified of any crashes through its OnStar safety system, and it dispatches a team to drain the batteries within 48 hours. GM said NHTSA didn’t drain the battery packs of energy after the tests, but the automaker acknowledged that it hadn’t told the agency of its procedures back in June when the first fire occurred.

Last week, GM CEO Dan Akerson told The Associated Press that in order to keep its customers happy, GM will buy back Volts from any owners who are afraid the cars will catch fire. He maintains that the car is safe and the fires occurred long after a crash and only when the batteries remained charged.

So far, GM said it has bought back about two dozen of the roughly 6,000 Volts now on U.S. roads. The company, clearly concerned about the image of its high-profile new technology, also offered loaner cars to Volt owners until it solves the fire problem. Akerson said he wants to fix the problem and make it right for customers.

Still, the fires could raise questions for potential electric car buyers just as the cars are hitting the market in greater numbers.

In the interview, Akerson said the coolant was among several causes that were under investigation, including circuit boards, the packing of the battery cells and the mixture of the coolant made of glycol, an alcohol compound.

“We’re not the only car company that has liquid-cooled batteries out there,” Akerson said. “There are many.”

He said it’s important for the entire auto industry and the future of electric cars to come up with procedures that work for all battery-powered vehicles. He said Lexus, Toyota Motor Corp.’s luxury brand, had quality problems when it was first introduced, but the company called all the cars back and fixed them, and Lexus went on to wild success. GM expects to follow a similar plan with the Volt batteries, he said.

“I think it behooves everyone including General Motors and all of our competition, but more importantly our customers, that we get it right,” Akerson said.

The Volt’s 400-pound (180-kilogram) battery pack is made up of individual cells that store power and a large case with channels that route coolant around the cells to keep them from overheating.

The Volt can go about 35 miles (56 kilometres) on battery power before a small gasoline-powered generator kicks in to keep the car running. The car can be recharged with a standard home electrical outlet.

The Nissan Leaf, a fully electric car and the Volt’s main competitor, has not had any similar fires after crash tests or real-world crashes, Nissan said. The Leaf battery is cooled by air rather than liquid.

TOKYO – Honda Motor is recalling 304,000 vehicles globally for air-bags that may inflate with too much pressure in a crash, send metal and plastic pieces flying and cause injuries or deaths.

Honda said there have been 20 accidents so far related to the problems, including two deaths in the United States in 2009.

The Japanese automaker announced the recall Friday, which affects the Accord, Civic, Odyssey, Pilot, CR-V and other models, manufactured in 2001 and 2002.

The recall spans 273,000 vehicles in the U.S., some 27,000 in Canada, nearly 2,000 vehicles in Japan and another 2,000 in other countries. It affected 359 vehicles in Europe — 200 in Germany, 158 in Israel and one in Great Britain, according to Honda.

The latest recall is an expansion of recalls for the same problem in 2008, and again carried out in 2009, as well as last year. The recall now covers about 2 million vehicles worldwide, according to Tokyo-based Honda.

Honda spokesman Hajime Kaneko said the cause for the latest recall was the use of incorrect material in the chemical used to deploy air bags.

The initial cause of the recall was excessive moisture in the inflator propellant, which is part of what inflates the air bag.

But that problem was found later to affect more vehicles than initially estimated, as incidents didn't stop happening, and the recall was expanded to account for the possibility that the problem was caused by a defective stamping machine used during production, he said.

Honda said it is extremely sorry about the recalls but believes the problem has now been taken care of, with no more recalls linked to this problem expected, he said.

Also included in the latest recall are 912 air-bag service parts sold for installation in vehicles for collision repair and other reasons, Honda said.

Upgrade now available for 2011, 2012 XC60, S60 and XC70 T6

TORONTO, ON - Following the recent announcement of Polestar Performance packages available for selected vehicles equipped with the T5 engine, Volvo Cars of Canada is announcing a factory-authorized performance tuning software for additional models at Volvo retailers across the country. Volvo Car's official motorsport and performance partner, Polestar Performance has been developing optimized performance upgrades for Volvo since 1999.

The next wave of Polestar performance software packages will be available for 2011 and newer XC60, S60 and XC70 fitted with a T6 engine. The T6 performance software package carries an MSRP of $1,495 installed and goes on sale nationwide Monday December 5th.

The Polestar Performance software package is now available for the following models:

2011-2012 S60 T6
2011-2012 XC60 T6
2011-2012 XC60 T6 R-Design
2011-2012 XC70 T6
2008-2012 C30 T5
2008-2012 C70 T5
2008-2011 S40 T5

"We have already received tremendous feedback from our customers just weeks after announcing the T5 software package," said Carol Kitchen, vice president of customer service for Volvo Cars of Canada. "We are pleased to offer this option to our performance-minded customers to own vehicles featuring the award-winning T6 engine."

The T6 Polestar software package adds 25 hp and 30 ft-lbs. of torque, upping power output to

325 hp and 355 ft-lbs. The software does not negatively affect fuel economy, as the efficient tuning of the engine only increases the power output when needed and will not void the existing Volvo factory warranty.