Toyota Motor Corporation Essay Example | Topics and Well Written Essays - 3000 words

Toyota Motor Corporation - Essay Example Toyota started announcing recalls of 8 – 9 millions after reports of 2000 fatal accidents and 19 deaths from its defective vehicles with accelerator and brake pedal issues. By February 2010 (just before ending of fiscal year on March 31), Toyota had recalled nearly 2 million vehicles from its main markets that also reflected in Income Statement, Cash Flows and Balance Sheet. In fact, the assets and liabilities / debts section were greatly affected from that recall because sales declined and products recalled simultaneously. Toyota Corporation estimated that recall would cost, at least, $2 billion in 2010 – 2011, which may increase in near future if suppliers would increase raw-material / inputs prices followed by high labour expenditures. It is worth mentioning that Toyota's sales in North America reduced by 16% alone in February 2010 in comparison to February 2009 just after the recall. On the other hand, the competitors operational in American markets were among the a ctual beneficiaries, since ‘General Motors recorded sales increase of 15%, Ford observed a growth of 24%, Nissan recorded the growth of 15%, and   Hyundai observed a phenomenal 24% growth in USA. Indeed, the recall enabled Ford Corporation to become second largest automobile seller across North America after General Motors. The recall sabotaged Toyota’s strategic and financial position because customers started switching to other brands, which later resulted in decline in market share. This just happened when Toyota had certain plans / aspirations to benefit from improvements in global economic outlook. Without any doubt, the company in the short - run has been unable to win trust of potential customers and maximise its monetary gains because of additional repair and delivery costs to be incurred from this recall. In addition, the loss of goodwill and reputation alone could prove quite devastating for company in near future when it will launch newly developed products. For instance, potential customers and industry analysts may raise questions about safety, security and reliability of Toyota’s vehicles. In a nut shell, it is justified to argue that Toyota’s balance sheet figures (assets and liabilities) position will deteriorate in fiscal year of 2011 because of mixed consumer confi dence on Toyota’s market offerings.