Toyota investors have slammed on the handbrake after discovering that Toyota had falsified and mishandled its car safety tests.
👉 Background: Toyota is the Japanese car manufacturer that was founded in 1937 and also owns the Daihatsu, Lexus and Hino brands, as well as 20% of Subaru. It's the largest automotive company in the whole world based on vehicle sales.
👉 What happened: Toyota investors have slammed on the handbrake after discovering that Toyota had falsified and mishandled its car safety tests. As a result, its share price dropped over 5% and took more than $15 billion USD off its valuation.
👉 What else: Toyota has promised that their cars are still safe to drive, but this led to a big hit to its brand equity.
💡Brand equity is the value that a company gains or loses from the perception of its brand by its customers. This could be based on a customer’s experiences but also due to the company’s reputation in the market.
💡Lexus and Toyota were both known as the most reliable car brands in the world in 2023. But, this safety scandal is likely to cause severe damage to its brand equity.
💡Remember Diesel-gate with Volkswagen back in 2015? They manipulated their diesel emission results. As a result, their CEO stepped down and then they settled a lawsuit for $14.7 billion USD. So this may only be the beginning for Toyota.
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