Toyota shares gain as US report clears electronics

YURI KAGEYAMA - AP Business Writer
The Associated Press
Transportation Secretary Ray LaHood speaks about the Toyota recalls, Tuesday, Feb. 8, 2011, at the Transportation Department in Washington. (AP Photo/Alex Brandon)
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Transportation Secretary Ray LaHood speaks about the Toyota recalls, Tuesday, Feb. 8, 2011, at the Transportation Department in Washington.

Toyota shares jumped more than 5 percent to a nine-month high in Tokyo on Wednesday, following a U.S. government report that ruled out electronic flaws in runaway Toyota vehicles.

The world's biggest automaker welcomed the findings as confirming the reliability of its cars.

Toyota Motor Corp. stock finished at 3,670 yen ($45) on the Tokyo Stock Exchange, its highest close since April 30, buoyed by the results of the 10-month investigation. Overnight on Wall Street, Toyota gained by more than 4 percent to close at $88.57.

Also a perk for the shares was Toyota's announcement Tuesday that it had raised its full-year earnings and sales forecasts because of booming sales in China and other high-growth markets.

After recalling more than 12 million vehicles around the world for a range of defects since late 2009, the big lingering question was whether there was a problem with the electronic systems in Toyota cars.

That would signal a huge problem, possibly resulting in additional massive recalls, as such systems are in every Toyota vehicle. It would further shatter the once sterling image for quality production that Toyota had boasted for decades.

"We believe that the results of the U.S. Department of Transportation's investigation confirms the reliability of our electronic throttle control systems," Toyota said in a statement. "We intend to continue to listen to our customers even closer and to offer not only safe vehicles but vehicles that provide peace of mind."

Toyota executives have repeatedly said they have tested the vehicles many times, trying to find possible electronic problems, and have never found any.

In Washington, the Department of Transportation said its investigation with NASA found that electronic flaws weren't to blame for the reports of sudden unintended acceleration that led to massive Toyota recalls.

Some of the cases could have been caused by mechanical defects — sticking accelerator pedals and gas pedals that can become trapped in floor mats — that have been dealt with in recalls, it said.

Some of the cases may have been caused by driver errors, such as hitting on the gas when they meant to brake, it said.

"We feel that Toyota vehicles are safe to drive," said Transportation Secretary Ray LaHood.

Toyota has promised to beef up quality controls and be quicker in responding to consumer complaints. But analysts say it is likely to take some years before Toyota can hope to fully win back the trust of American buyers.

Toyota may still be held liable in class-action lawsuits in the U.S. because accidents could have been caused by the mechanical problems that the study has found, and doubts can continue to be raised about electronic problems.

Toyota paid the U.S. government a record $48.8 million in fines for its handling of three recalls.

Still, Toyota is on a roll in markets outside the U.S. like Asia, South America and Africa, where the number of vehicles sold is still relatively small but growth potential is huge.

Toyota raised its projection for global vehicle sales Tuesday to 7.48 million vehicles in the year through March, up from an earlier forecast of 7.1 million vehicles, and marking a 3 percent increase from 7.24 million in the previous fiscal year.

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Associated Press writer Ken Thomas in Washington contributed to this report.