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Faulty pedals prompt Toyota recall
Japanese car manufacturer's shares rise as investors shrug off decision affecting 2.3 million vehicles.
Last Modified: 25 Feb 2011 09:17 GMT
Toyota's reign as world's largest car maker has faced impact of economic crisis and worldwide recalls [Reuters]

Shares in Toyota have risen more than two per cent after investors shrugged off the Japan car manufacturer's latest recall of 2.3 million vehicles for a defect that could cause accelerator pedals to stick.

Toyota shares were up 2.04 per cent at 3,750 yen ($45.8) on the Tokyo Stock Exchange at 04:19 GMT on Friday.

Toyota, the world's large car maker, gained in Tokyo trading after investment bank Credit Suisse upgraded the firm to "outperform" from "neutral", predicting it would manage to cut costs and boost operating profits.

Toyota recalled 2.3 million vehicles in North America on Thursday to fix floor mat and carpet defects that could jam the accelerator - bringing its worldwide recalls to more than 12 million since late 2009.

The US National Highway Traffic Safety Administration said it had asked Toyota to carry out the call-back, after a 10-month probe that ruled out problems with the vehicles' electronic control systems.

The NHTSA said it hoped the new recalls would bring an end to the issue.

Toyota

 Founded in 1937, based in Toyota City, Japan

 Employs approximately 320,000 people worldwide, with manufacturing or assembly plants in 27 countries

 Overtook GM in 2008 to become world's number one selling carmaker

 Sold 7.8 million vehicles worldwide in 2009, including the Prius, the first commercial, mass-produced hybrid car

 Reported a record annual loss of $4.4bn in May 2010, due to impact of global financial crisis

"As a result of the agency's review, NHTSA asked Toyota to recall these additional vehicles, and now that the company has done so, our investigation is closed," David Strickland, an administrator, said in a statement.

Mamoru Kato, a car analyst at the Tokai Tokyo Research Centre, said "the latest recall was a bit disappointing, but it was nothing surprising".

"It was not like having a new problem emerge. The recall was an additional move to fix the earlier defect," he said.

"I wouldn't say it was very surprising or serious."

Yoshihiro Okumura, the general manager at Chibagin Asset Management, noted that investors are now reacting more calmly to Toyota's recalls.

"It seems that the recalls are starting to be viewed as Toyota's measures to step up quality more so than to fix a malfunction," Okumura told the Dow Jones Newswires.

In 2008, Toyota ended General Motors' 77-year reign as the world's largest car manufacturer but has since faced the impact of the economic crisis, the recalls and a strong yen.

While net profit in the nine months to December quadrupled year-on-year on a post-crisis rebound, last year ended with Toyota losing market share to rivals in the US - its second largest market by volume.

It faces tough competition to regain its US market dominance and must still deal with a number of lawsuits over accidents linked to the accelerator issue.

Source:
Agencies
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