Toyota Calls Back 7.4 Million Cars Amid Bearish Trend

When a car manufacturer starts calling back its cars, this is a force-majeure for this company, which jeopardizes its image and brand.

Investors keep suffering direct losses because of a sharp increase in Toyota’s expenses connected with transportation and repair works. As the result, the quarterly report will definitely come out worse than expected.

What is wrong with Toyota autos this time? What impact will it have on the stock market?

Toyota Calls Back 7.4 Million Cars: Reasons and Consequences

Toyota Motor Corporation has recently announced about its decision to call back over 7 million cars from the USA, Japan and European countries to eliminate… a window-raiser defect.

The following models are called back:

·         Europe: Yaris, Corolla, Camry and Rav-4;

·         USA: Yaris, Corolla, Matrix, Camry, RAV4, Highlander, Tundra, Sequoia, Scion ВР and XD;

·         Japan: Vitz, Belta, Ractis, Ist, Auris and Corolla Lumimon.

Expert Opinion: Toyota’s Stock – Headache For Investors

 According to ’s leading expert in financial markets form Canada, Toyota’s stock has been a headache for investors so far.

In late September, the price broke above the local high at $82.9 and reached $83.8 only to see a collapse down to $76. This suggests investors’ disappointment and uncertainty over the company’s prospects. Those who hoped for a price rally were disappointed and are now suffering major losses. had warned the readers of Market Leader about the risks.

The chart below, courtesy of , reflects the current state of affairs in the market of Toyota’s stock. This is not the first time Toyota (biggest car manufacturer 2011) has to call back big amounts of cars. In 2011, the company has to call back 3.5 million cars. This is the 3^rd consecutive year Toyota is among the industry’s biggest botchers.

Which is more unexpected, while seeing the value of its stock bleeding away, Toyota decided to give their clients and investors another “pleasant surprise” by calling back millions of cars. The news shocked investors and analysts around the globe, simultaneously scaring away potential buyers of its shares.

How would like to purchase a stock when company is facing a force-majeure?

anticipated the decline in April 2012, 6 months before the downtrend (Tips For Investors: Nissan VS Toyota?).

The chart below, which is taken from the article published in Market leader on April 11^th 2012, proves that:

As we can see, the price dropped even further down below the $80 target.

Another factor against buying Toyota’s stock is the fact that decent dividends are paid to the company’s management. That is why Toyota’s profit rate is only 2.15% (this is the second lowest rate after Peugeot).

Moreover, Toyota is the leader among the world’s most popular car brands in terms of defects.

Obviously, it is hard to avoid defects during assembly-line production. Anyway, it is getting harder and harder to believe that Toyota’s management will eventually keep their promise to regain the company’s leadership in the global motor industry in 2013…