Toyota recalls 1.7m vehicles worldwide

 
City A.M. Reporter
TOYOTA, the world’s top automaker and Japan’s second largest company by market capitalisation, said it would recall more than 1.7m vehicles worldwide, bringing its total for recalls to nearly 16m since late 2009 and dealing a blow to its efforts to restore its reputation for quality.

Although the situation is different from last year, when Toyota attracted intense scrutiny from US safety regulators over unintended acceleration problems that were blamed for dozens of fatalities, the latest recall may make it harder for Toyota to convince investors it has put its quality problems behind it.

Shares in Toyota extended early declines and closed down nearly two per cent on the Tokyo Stock Exchange after the announcement.

“Toyota faces harsh competition from Honda, which is in a much better situation in the US market – this is reflected in its stock price which now stands at multi-year highs,” said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.

“That’s why investors are a little nervous and sold Toyota when this negative news came out,” he said.

Toyota was the only major automaker to see its sales fall in the US last year, and just squeaked by General Motors to keep its spot at the top of the global sales ranking.

The biggest recall among those announced yesterday was to fix a faulty fuel pump and connecting pipe in 1.34m vehicles, including 141,000 Avensis units sold overseas. It’s Toyota’s biggest recall in six years and its second-biggest ever for a single defect.