Two automotive companies announced product recalls in the last week: One involved 7.4 million vehicles, the other involved 400. But the consequences for the two companies are likely to be very different.
Toyota’s 7.4 million-vehicle recall was for problems with power window switches. Memories of the company’s 2009 crisis, sparked by problems with unintended acceleration, are still fresh. It had to overcome supply-chain problems following the tsunami in 2010. And over the last couple of months it has experienced a 50 percent sales drop in China, its biggest market, because of the political tensions between Japan and China. This latest recall could have been seen as dragging Toyota back into crisis mode. Yet it was met with a shrug by investors—the share price dropped only 1.3 percent when the recall was announced.