Toyota’s (TM) shares backpedaled into the red zone during early trading on Wednesday after the U.S. auto safety authority disclosed that the Japanese carmaker has issued a recall for 1,024,407 vehicles in the country.
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The vehicles are being pulled back due to a flaw that could cause their backup cameras to fail. According to the U.S. National Highway Traffic Safety Administration (NHTSA), a software error may cause the rear-view camera to freeze or fail to display at all when the vehicle is put in reverse.
Similarly, Toyota confirmed the situation last Thursday, noting that the fault could result in a crash.
What Vehicle Models are Affected?
According to NHTSA, the fault affects the Panoramic View Monitor System of Toyota and Lexus models with production dates from 2022 to 2026, as well as Subaru (FUJHY) Solterra vehicles. In addition to these models, Toyota listed other affected models, including the Toyota bZ4X, Camry, Crown, Grand Highlander, and Land Cruiser.
The monitor system uses multiple cameras around the vehicle to provide drivers with a 360-degree view of the area around the car. This view is often displayed on the vehicle’s infotainment screen and helps drivers to maneuver, reverse, and park in tight spaces.
Providing further clarification, Toyota noted that the fault stems from the software behind the system’s parking assist electronic control unit (ECU). The ECU manages features like backup cameras, parking sensors, and displays that help drivers park safely.
The automaker assured owners that its dealer will fix the issue free of charge. The recall adds to the list of recalls Toyota has issued this year.
Toyota Battles Recalls amid Sales Boost
In October, the Japanese carmaker recalled almost 394,000 vehicles in the U.S. due to a similar issue. Earlier this year, it also recalled about 443,000 Tundra and Tundra Hybrid pickup trucks with manufacturing dates between 2022 and 2025. The recall was prompted by the possibility that moisture could enter the trucks’ reverse lamps, causing them to stop working and blurring drivers’ vision.
These recalls pose a reputational challenge to Toyota, which expanded its U.S. sales in October to 207,910 units and remains the second-best-selling automobile brand in Europe.
The Japanese carmaker’s global sales rose 2% year-over-year during its recent second quarter. Yet, its operating profit plunged by more than 70%, impacted by rising costs of engine certification, labor, and tariffs.
Are Toyota Shares Worth Buying?
TipRanks’ AI Stock Analysts provide some insight on Toyota’s shares. While models from OpenAI, Gemini, and Perplexity give the stock an Outperform rating, Grok and DeepSeek rate it Neutral.
The bullish AI analysts point to Toyota’s financial performance and valuation, while the bearish ones cite its declining profit margins and weak cash flow. However, all the ratings come with upside potential.
For instance, while OpenAI-4o’s average TM price target of $214 implies a 5% upside, DeepSeek-R1-0528’s $210 suggests a 3% upswing from the current level.
