Last Updated :
02 March 2010 at 21:00 IST
Toyota, Maruti recall to hit steel, palladium
By Geena Paul
BEIJING/NEW DELHI (Commodity Online): During the past one month, the global auto market received two major shocks with the auto giant Toyota recalling 8.5 million cars worldwide and Japan’s Suzuki being forced to withdraw over 1 lakh A-Star vehicles manufactured in India at Maruti Suzuki Ltd. Even
Even as the auto sector watches with bated breath the impact of the recall, other sectors will also soon feel the pinch because of the two companies’ negative publicity. One area which will feel the heat is the metals market. Steel, copper, platinum and palladium, all metals used in auto making, will suffer from the biggest ever auto recall till now. Never in the history of auto market, three auto majors, including Honda, had to recall vehicles at the same time. Due to the negative publicity car sales of these companies are set to fall and this will hit production which in turn will affect the steel and palladium markets. Palladium is used in making costly cars’ exhausts.
Another factor which is causing worry to the recession-hit world is that the two setbacks have hit two major booming markets in the world now — China and India, where auto sales had set new records even during recession time.
Of the automobiles that Toyota recalled all over the world, 5 models were manufactured and sold in China, including the RAV4, Corolla, Camry, Highlander and the Yaris.
Adding to this, Maruti Suzuki, India’s top automobile company, has also joined the ranks of international car manufacturers like Toyota and Honda in recalling vehicles to repair faults. Maruti said it will recall around 100,000 units of A-star manufactured between November 2008, when the vehicle was launched, and August 2009 to change fuel pump gaskets. This will be the biggest recall by Maruti since its inception in 1983. The company had earlier recalled 76,000 units of Omni in 2001 followed by another 500 units of Zen in 2006.
Analysts said going forward sentiment could get impacted with consumers fearing this can spread to other models also. The Indian auto market has grown at a blistering pace in the last two quarters, closing out 2009-10 at over 10%, the best in several years. Maruti has crossed the one-million-mark for vehicles produced in a financial year by any Indian automobile company.
Toyota’s sales are sharply decreasing in the US as a result of the recall incident. Toyota’s market share in the US auto market dropped from 17.5 per cent January 15 to 12.1 per cent February 15.
To make things worse, Toyota’s best-selling automobile, Corolla, also received several consumer complaints. And the company is recalling Corolla also. So far, Toyota has only recalled the RAVA in China.
So, all this negative publicity will certainly hit the production of Toyota and Suzuki causing major worries to the global metal markets. Palladium market has been struggling for quite sometime because of the recession and at the fag end of 2009, the metal was showing signs of recovery.
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