In what is being called the largest recall in Toyota Motor Corp.’s 75-year history, the automotive giant is now recalling more than 7.4 million vehicles worldwide because of a faulty power window switch that has been deemed a potential fire hazard.
The recall is raising questions about Toyota’s ability to resolve quality and safety issues, considering recalls it experienced back in 2009 and 2010, involving over 10 million vehicles. In fact, Toyota’s president Akio Toyoda has appeared before Congress to provide an explanation for the company’s amount of recalls.
Since that time, Toyota has committed to revving up quality control processes, but the latest recall affects vehicles produced during or prior to 2009.
Will Toyota’s Financials Be Affected?
Toyota sales were up almost 32% through this September as compared to last year, which is more than double the growth of the US industry. Toyota also regained its crown as the world's top-selling automaker during the first half of 2012, defeating its competitor General Motors.
With sales of nearly 5 million vehicles, Toyota surpassed GM by nearly 300,000 automobiles.
Although Toyota posted its biggest quarterly operating profit in four years during April through June of this year, this new setback could have a major impact on what seemed to be a notable rebound from the financially damaging effects of last year's earthquake and tsunami in Japan – disabling factories and causing a shortage of models available for sale at Toyota dealerships.
Analysts say it is too early to tell whether a recall of this size will hurt Toyota’s sales. Mike Jackson, Director of North American production forecasting for IHS Automotive,k, stated: “If Toyota makes its customers feel like they are being cared for properly as the repairs are done, there probably won't be much of an impact.”
Key Statistics - Global Automotive Manufacturing Industry (source: MarketLine)
- By 2016, the global automotive manufacturing industry is expected see an increase of over 41% with value exceeding $2 trillion – up from its 6.3% value increase in 2011.
- With an anticipated increase by 2016 of nearly 39% since 2011, the global automotive manufacturing volume should reach nearly 190 million units. This marks a tremendous increase as compared to its growth of just over 4% in 2011, with almost 137 million units.
- Almost 56% of the global automotive manufacturing industry’s total value is attributed to the cars segment.
- Over 47% of the global automotive manufacturing industry’s value is accounted for by Asia-Pacific.