Toyota Motor Corp shares slid to a 10-month low on Thursday after the Obama administration stepped up the pressure on the world's largest carmaker to address a range of safety issues.
Shares of Toyota, set to report third-quarter results after the bell, have now lost some $30 billion or one-fifth of their value since a recent high on January 21, hammered by a deepening recall crisis that has badly tarnished the company's reputation for safe vehicles.
On Thursday morning, they fell 3.5 percent to 3,280 yen, the lowest since April 1.
In New York a day earlier, Toyota's American Depositary Receipts (ADRs) sank 6.0 percent in one of the heaviest volumes in its U.S.-listed history after a top U.S. transportation official warned Toyota owners caught up in the massive recall to stop driving their cars, triggering alarm.
U.S. Transportation Secretary Ray LaHood later called his remark an obvious misstatement, although he said he would take the unusual step of calling Toyota President Akio Toyoda to emphasize how seriously the Obama administration is taking the investigations.
Our ... people will hold Toyota's feet to the fire to make sure they are going to do everything they said they were going to do to make the vehicles safe, he said.
All eyes are now on Toyota's third-quarter results announcement at 3 p.m. (0600 GMT), at which it is widely expected to lift its cautious guidance for this year.
With less than two months left in the financial year, Toyota is likely to slash what most analysts deemed an excessively conservative operating loss forecast of 350 billion yen ($3.85 billion).
October-December is likely to show a second straight quarterly profit as government incentives drove sales higher worldwide.
Toyota's recall of more than 8 million vehicles due to problems with unintended acceleration has overshadowed what until just two weeks ago had been expected to be an upbeat story of improving earnings.
Investors have turned their focus on how long and far the damage would go, with Toyota's sales in its most important U.S. market already falling 16 percent in January -- enough to knock it to third place, below Ford Motor Co.
Analysts have estimated direct costs -- from repairs to the unprecedented halt in North American sales -- to amount to as much as $2 billion.
The big question mark for the new year, starting in April, would be how much and how long sales remain depressed as a result of bad publicity and a scarred brand image, as well as the unknown scope of litigation and other costs.
Before Toyota expanded the recall last week, analysts had mostly projected a comfortable return to profits in the year starting April, fueled by an anticipated recovery in global car demand, especially in the United States.
One of the recalls, involving faulty accelerator pedals, covers eight models in the United States accounting for about 60 percent of Toyota's sales there last year. Toyota has suspended U.S. sales of those models, which include the country's most popular car, Camry, indefinitely until the problem is fixed.
HONDA IN GOOD SHAPE
In contrast to Toyota's slump, shares of Honda Motor Co jumped after Japan's No.2 automaker raised its annual outlook far beyond investor expectations and said it anticipates further growth next financial year.
The latest series of recalls has put Toyota and Honda in different positions, said Yoshihiko Tabei, analyst at Kazaka Securities.
While Toyota has to halt production due to the recall and will probably have to review its supply chain into next fiscal year, Honda has surprised us with strong results and has returned nearly to its best shape, he said.
Honda's share price briefly surpassed Toyota's for the first time since just after Honda split its stock in mid-2006.
(Additional reporting by Yumiko Nishitani and David Dolan; Editing by Lincoln Feast) ($1=90.99 Yen)