The sputtering of Toyota Motors Corp. shares on Wednesday is fascinating to watch. If another round of safety concerns (this time over the brakes on the Prius model) wasn’t enough to send the out-of-favour stock exploring new depths, then off-the-cuff comments from U.S. Transportation secretary Ray LaHood did the trick.
In a meeting with reporters, Mr. LaHood said he wanted to speak directly with Toyota’s chief executive about the recent safety concerns over the company’s vehicles: “This is very serious,” Mr. LaHood said, according to the Wall Street Journal. “After I talk with him, they’ll get it. We’re going to keep the pressure on.”
Not to belittle the safety concerns here, but given that the U.S. government essentially owns rival General Motors Corp., which was recently unseated by Toyota as the world’s largest automobile maker, this seems a curious thing for a government official to say.
Even more curious, Mr. LaHood responded to a question during a House of Representatives hearing by saying: “My advice is, if anybody owns one of these vehicles, stop driving it, take it to the Toyota dealer because they believe they have the fix for it.”
He later clarified those comments outside the hearing, and the backtracking put a floor under Toyota shares: “What I said in there was obviously a misstatement. My advice is, if you have one of these vehicles, if you are in doubt, take it to the dealership today.”
The shares, which trade as American Depositary Receipts in New York, traded at $74.15 (U.S.) on Wednesday afternoon, down $4.03, or 5.2 per cent. Earlier, they had fallen as low as $71.90.
Is the U.S. government stepping up its efforts to help domestic automakers by bashing Toyota during a vulnerable time for the company? We’re just asking – and your views on the matter are welcome – but Toyota seems to be fighting back.
In a release, Toyota appeared to remind government officials that the company might be Japanese, but it employs a lot of Americans: “We appreciate Secretary LaHood’s clarification of his remarks today about Toyota’s recall for sticking accelerator pedals,” it said here. “Our entire organization of 172,000 North American employees and dealership personnel is working around the clock to fix the accelerator pedals for our customers.”
For what it’s worth, though, analysts at JPMorgan are advising investors to avoid the temptation to bottom-feed on this beaten up stock. You can read more about their views here.
