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Toyota Motor Corp. (TM) grabbed headlines again by recalling nearly 700,000 vehicles due to two separate problems. The automaker would recall 682,000 units of Tacoma truck, Camry sedan and Venza crossover SUVs models that were manufactured between 2005 and 2011.

The major part of the recall comprises 495,000 units of Tacoma trucks from the model years 2005–2009. The recall is related to a defective steering wheel mechanism that could rub against a cable assembly and damage the electrical connection. The electrical glitch could disable the airbag mechanism, thereby increasing the risk of injury in a crash.

The second set of recall involves 70,500 units of Camry from the 2009 model year and 116,000 units of Venza from the 2009–2011 model year. It is driven by silicon grease that may have gotten inside the stop-lamp switch at the factory due to improper installation. The defect could lead to electrical resistance in the vehicles.

Toyota revealed that it has yet to obtain the replacement parts for the recalled vehicles. Once they are obtained, the company will notify the vehicle owners and replace the parts free of cost. Toyota said it is not aware of any accidents or injuries involving the defective vehicles.

The past string of recalls has tarnished Toyota’s reputation, resulting in declining sales and lower vehicle resale value. Since November 2009, Toyota has recalled more than 15 million vehicles globally in about 20 recalls, surpassing all other automakers. The Transportation Department of U.S. also imposed a fine of $48.4 million due to late recall of millions of defective vehicles.

The Zacks #4 Rank (Sell) company posted an 8.3% fall in profit to ¥101.7 billion ($2.6 billion) in the third quarter of fiscal year ended December 31, 2011 from ¥110.9 billion in the same quarter of the prior fiscal year. On a per share basis, profits were ¥25.81 (67 cents) versus ¥29.86 in the third quarter of fiscal 2011, exceeding the Zacks Consensus Estimate of 27 cents. However, revenues in the quarter grew 4% to ¥4.9 trillion ($126.3 billion).

The continuous decline in profits was attributable to disruptions in supply of parts caused by the earthquake and tsunami in Japan on March 11, 2011, as well as floods in Thailand in the second half of 2011, and due to continued appreciation of yen against the US dollar.

However, Toyota upgraded its financial guidance for fiscal 2012 based on cost reduction measures and continued recovery in production. The company expects revenues of ¥18.3 trillion and net profit of ¥200.0 billion for the year, up from the prior forecast of ¥18.2 trillion and ¥180 billion, respectively.

Meanwhile, Toyota's compatriot Honda Motor Co. (HMC) reported a 41% decline in profits to ¥47.6 billion ($613 million) or ¥26.45 (34 cents) per share in the third quarter of fiscal 2012 from ¥81.1 billion or ¥45.01 per share in the same quarter of prior fiscal year. Revenues in the quarter dipped 8% to ¥1.9 trillion ($25.0 billion), driven by lower revenues due to the same factors affecting Toyota.

 
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