Impact of Product Recall on Share Prices: A Case Study of Toyota

Capital market research

TABLE OF CONTENTS
Introduction................................................................................................................................3
News Article...............................................................................................................................3
Impact on share prices................................................................................................................4
Respond of company towards the news.....................................................................................4
Conclusion..................................................................................................................................5

INTRODUCTION
Toyota motor Corporation is the multinational automotive manufacturing company,
headquartered at Toyota city, Japan. Toyota is one of the largest company in the world,
founded in 1937, since then it is continuously growing and achieve the significant position. It
is mainly engaged in the automobile manufacturing sector (Li, 2018). Along with the
automotive business, company is also engaged in the e-Toyota business, housing,
communications, financial services, Marine, Agriculture and Biotechnology, Powertrain
Units sales business and such other.
In the present era, the company is the market leader of the world in respect to the sales of the
hybrid electric vehicle, and it is also one of the largest companies to motivate the mass-
market for accepting the hybrid vehicle across the world (Liker and Ogden, 2011). The
company has also expanded its operations in most of the parts of the world such as in
Australia, North America, Europe and many other countries. The company also possess
significant human resources and around 3.64 lacs employees are working in whole over the
world. The present study is related to the evaluation of impact of news article of recalling
vehicles on share prices of the company. This study prescribes the impact on the share price
of Toyota Company before and after the announcement and its impact on the long term
period by considering the response of the management over the same.
NEWS ARTICLE
In the U.S., Toyota stated that it recalls about 807,000 of its Prius and Prius V hybrids
vehicles since they might stall while driving. The automaker is, in addition, recalling 168,000
extra motor vehicles in 2018 and 2019 inclusive of Tundra pickup trucks and Sequoia SUVs
for the reason of airbag trouble (Antti, 2018).
The faults take place in "rare situations,” according to the Toyota statement. It engages the
vehicle deteriorating to "go into a fail-safe driving form due to hybrid scheme faults."
At the time that occurs, “the motor vehicle might lose control and stall. As power steering
and braking will stay prepared, a vehicle stall although driving at advanced speeds might add
to the danger of a crash (Ball, Shah and Donohue, 2018)."
The automaker does not mention that rather any crashes had been connected with it, and lead
to any problems like injuries or deaths.