all

Toyota's Electronics Cleared According to Study


Tuesday, February 8th, 2011
News

According to a Bloomberg article, Toyota Motor Corporation rose to its highest close in nine months on the Tokyo stock exchange today. This stock gained nearly 5 percent on this stock exchange, representing its highest close since last April.

Primarily, this encouraging development is the result of the release of a recent 10-month, multi-million dollar study conducted by the Department of Transportation. The report alleviates Toyota of any blame for the sudden acceleration problems that cropped up in 2007 resulting in the death of four people. These incidents precipitated a recall of more than 8 million of its vehicles on the basis of these pedal dysfunctions, and forced the company to pay out nearly $50 million in penalties after the release of the original investigation conducted by the National Highway Traffic Safety Administration (NHTSA).

According to an article in the New York Times, the study led by NASA showed that in all 89 deaths associated with uncontrolled acceleration were not the result of faulty Toyota electronics. The Wall Street Journal states that the most significant problem was operator error. Commonly drivers would hit the accelerator instead of the brakes. Additionally, other problems cited were mechanical such as stuck accelerator pedals and floor mats inadvertently locking the throttle in gear.

The scare from the initial incident in 2007, created conditions for torrents of reports to be filed citing braking problems and uncontrolled acceleration issues. This led to significant damage to the company’s reputation and a requisite drop in stock prices. However, according to the analysis of Efraim Levey at Standard and Poor’s  Equity Research Division, the report are the “best Toyota could have hoped for.” While this division currently ranks the stock as a ‘hold,’ Efraim indicated that this was the first step in the company recovering from the damage done to its reputation after these incidents occurred.



Article by Andrew Timm

The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com



Tags: electronics , nasa , nhtsa , study , tokyo , toyota