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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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Toyota shares down on recall news

Article By: ,  Financial Analyst
April 9, 2014 11:15 AM

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.

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