The share price of Toyota fell today (April 9th) after the carmaker confirmed it is recalling millions of vehicles globally as a result of safety concerns.
A number of different issues have been raised by the company, which is recalling tens of thousands of cars in the UK market alone.
Toyota revealed that a spiral cable attached to the driver's side airbag in 3.5 million vehicles needs to be replaced due to the risk of it severing a link to the airbag when the steering wheel is turned by the driver.
Further issues with cars outlined by the manufacturer include a problem with the engine starters that poses a fire risk, as well as issues with seat rails, steering columns, windscreen wipers.
Despite Toyota stressing that it is not aware of any accidents as a result of any of these problems with its cars, investors responded negatively to the massive recall and the share price of the firm dipped today as a result.
However, Toyota did admit that the problem with the engine starters has been linked to two fires in its vehicles. The car manufacturer admitted that "due to inefficiencies in the design of the starter motor relays, metallic particles might accumulate on the contacts within the relay".
Worst case scenario
It was pointed out by the company that if the relays continue to be used by drivers then the particles may come off and enter the relay's circuitry, which Toyota said in the "worst case, this could lead to the starter relays catching fire".
Toyota is far from the only major car manufacturer to be having problems with its vehicles and to have issued a recall as a result, with GM recently confirming many of its models have a range of problems that need to be fixed.
Following the announcement, the share price of Toyota was down by more than 1.5 per cent during trading today on the Frankfurt Stock Exchange.
Learn about the Asian markets and CFD trading at City Index
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.