Article By Melanie Kramer
Toyota has revealed it will recall another 1.7 million vehicles worldwide over airbag faults. The auto industry stalwart’s share price could be hit in the next session of trading.
23 Deaths Caused Worldwide by Takata Air Bag Inflators
The latest recall is actually part of an ongoing recall program for Toyota which began in 2016 and part of the largest recall campaign ever. The news may still affect confidence in Toyota stock as previous recalls have led to share price falls.
Toyota recalled the vehicles over possibly faulty Takata airbag inflators. The 1.7 million is on top of 37 million US vehicles already recalled and 16.7 million left to be recalled.
Ford last week also recalled nearly 1 million of its models over the same issue. A further 17 car-makers are affected by the Takata airbag inflator problem with a massive 100 million vehicles needing replacement parts. 7.2 million airbag inflators were repaired in the US in 2018 alone.
Of this recall, 1.3 million models in the US from between 2010 and 2015 are affected.
Reports indicate that 23 deaths and 290 injuries worldwide are linked to the rupturing of faulty Takata airbag inflators. Of the deaths, 21 have been in Honda vehicles and two in Ford vehicles. No deaths appear to have been reported for Toyota.
How Previous Recalls Impacted Toyota Share Price
In 2010, Toyota’s shares on the Tokyo Stock Exchange fell after it recalled 8 million vehicles with reportedly defective accelerator pedals. Analysts said the lost sales and repairs would cost Toyota $2 billion.
In January 2011, Toyota recalled 1.7 million vehicles in the US, Europe, and Japan over potential fuel system and other defects. Its share price fell 2% after the announcement.
Another recall in October 2013 of less than 1 million vehicles worldwide with a fault in the air-conditioning cleanser led to a 0.4% share price fall the day after the announcement.
Recalls have been an issue for the firm since 2009. In 2013, it was ruled that there were no electronic defects in Toyota vehicles and driver error was blamed for acceleration issues. Toyota’s shares had dropped 20% in a month and sales were hit by a similar percentage. It took years for the company to recover.
The current recall is part of an ongoing program that should come as no real surprise for investors. However, evidence suggests Toyota’s share price often suffers immediately after recall announcements. Toyota’s stock may well see some price decline on the Tokyo Stock Exchange and NYSE during the next session. Considering the ongoing campaign of recalls, the effect could be small and short-lived.
Today, the Dow Jones continued a four-day rally as optimism grew for a trade resolution between the US and China.
Featured Image from Shutterstock. Price Charts from TradingView.