Shares of Japan’s Toyota Motor Corporation (TM -2.15%) slid 2.4% through 10:45 a.m. ET on Wednesday after a Wall Street Journal report spooked investors in the automotive sector.
Reviewing a report on luxury driver-assistance features from the Insurance Institute for Highway Safety (IIHS), the Journal reported that 11 out of 14 car models surveyed scored “poor” or worse for having inadequate measures to prevent drivers from losing focus on the road.
Saying the quiet part out loud
At the risk of stating the obvious, drivers buy cars with autonomous driving capability (of any level) so their cars can do some of the driving and they can pay less attention to the road. That’s why they pay the premium for these features!
And yet, the IIHS sees this as a bug, not a feature. It worries these tools “lack … appropriate safeguards” to ensure drivers do keep eyes on the road (e.g., bells and whistles that go off when in-car cameras see a driver’s eyes wandering).
Individual vehicles from General Motors and Nissan were singled out with “marginal” scores in the IIHS report, while Tesla, Ford, Volvo, and others scored “poor.” Toyota actually scored highest of any brand surveyed, with the Teammate feature on its Lexus LS getting an “acceptable” rating.
And that’s bad news?
It’s curious to see Toyota stock down on that news. A win is a win, even if it’s only at an acceptable level.
Still, the broader import of the report could be that driver assistance features, touted as a high-tech luxury, aren’t yet up to snuff — and might not be worth paying for. That’s a long-term threat to Toyota’s revenue — not a deal-breaker, perhaps, but a factor investors should bear in mind.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool recommends General Motors and recommends the following options: long January 2025 $25 calls on General Motors. The Motley Fool has a disclosure policy.
