Toyota's Market Value Plunges Over $15B Amid Test Falsification Scandal; Mazda, Honda, Suzuki Follow Suit
The stock prices of major Japanese automakers, including Toyota Motor Corp. (OTC:TOYOF), Mazda Motor Corp. (OTC:MZDAY), Honda Motor Co., Ltd. (OTC:HNDAF), and Suzuki Motor Corp. (OTC:SZKMY), have taken a hit following a safety scandal.
What Happened: The Japanese transport ministry discovered that false data was used to certify certain models, leading to a significant drop in the stock prices of these automakers, reported CNBC on Sunday.
Toyota, the largest carmaker in Japan, saw its shares plummet by over 5.4% last week, resulting in a market value loss of 2.45 trillion Japanese yen ($15.62 billion). Mazda, the second-largest automaker in Japan, experienced a 7.7% fall in its shares, leading to a market capitalization loss of 80.33 billion yen ($511.8 million).
Other automakers, including Honda, Suzuki, and Yamaha, were also found to have submitted false test data or falsified vehicles used in crash tests. This led to a drop in their stock prices as well.
Last week, Toyota announced a temporary halt in shipments and sales of three models made in Japan: the Corolla Fielder, Corolla Axio, and Yaris Cross, following an investigation by the ministry.
Toyota’s Chairman Akio Toyoda apologized for the discrepancy, admitting that seven models were tested using methods that differ from the standards defined by the national authorities.
Similarly, Mazda suspended the Roadster RF and Mazda 2 from May 30. Both companies assured customers that they can still drive their cars.
Why It Matters: The recent scandal comes on the heels of a broader investigation into Japanese automakers. Last week, the Ministry of Land, Infrastructure, Transport and Tourism conducted an on-site investigation at Toyota’s headquarters following the discovery of irregularities in its certification applications. This was part of a comprehensive examination mandated across the industry due to a safety test scandal involving Toyota’s Daihatsu unit.
Furthermore, on Friday, reports surfaced that Mitsubishi UFJ Financial Group Inc. (NYSE:MUFG) and Sumitomo Mitsui Financial Group Inc. (NYSE:SMFG) plan to divest approximately 1.32 trillion yen ($8.5 billion) worth of strategic shareholdings in Toyota. This move is part of a broader strategy to dismantle cross-held shares and mitigate adverse effects on Toyota’s share price. The banks will leverage Toyota’s recent 1 trillion yen buyback initiative.
Toyota stock has gained more than 36% in the last 12 months. Investors can gain exposure to the stock via Avantis International Large Cap Value ETF (NYSE:AVIV) and ActivePassive International Equity ETF (NYSE:APIE)
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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote