Toyota Makes another Global Recall - Analyst Blog
November 16 2012 - 10:40AM
Zacks
Toyota Motor Corp. (TM) announced another
worldwide recall of 2.77 million vehicles after its major recall of
7.43 million vehicles last month. The latest recall involves 14
models including the Prius hybrid and 2000–2006 Corolla compact
sedans that are subject to inspection and repair due to a problem
with their steering and water-pump systems.
The Toyota-City, Japan based automaker will recall 1.52 million
vehicles in Japan and 1.25 million vehicles overseas, including
670,000 Prius hybrids in the U.S., mainly to replace the electric
water pump. In rest of the vehicles, the company would inspect or
replace the defective steering intermediate extension shaft, which
can cause unwanted steering.
Toyota has not received any reports of crashes or injuries related
to the defective vehicles. The company has decided to notify owners
of recalled vehicles next month. Repairs would take an hour for
fixing the steering shaft and about 90 minutes to replace the
water-pump.
The last month’s worldwide recall of 7.43 million vehicles included
more than a dozen models manufactured between 2005 and 2010. The
automaker needs to fix faulty power window switches in the vehicles
that can cause fire because they didn’t have grease applied
properly during production.
The recall includes vehicles sold in the U.S., Japan, Europe and
elsewhere. In North America, the company will recall a total of
2.47 million vehicles covering Yaris, Corolla, Matrix, Camry, RAV4,
Highlander, Tundra, Sequoia and Scion xB and xD models.
The past string of recalls has tarnished Toyota’s reputation,
resulting in declining sales and lower vehicle resale value. Since
November 2009, the automaker has recalled more than 15 million
vehicles globally in more than 20 recalls, surpassing all other
automakers. The company lost its No.1 position to General
Motors Company (GM) and Ford Motor Co.
(F) in terms of sales volumes in the U.S.
However, Toyota has recovered well from the twin disaster in Japan
and severe flooding in Thailand last year, apart from the backlash
of a series of safety recalls in the past. In the second quarter of
fiscal year ended September 30, 2012, the Zacks #3 Rank (Hold)
company saw more than threefold increase in profits to ¥257.92
billion ($3.28 billion) or ¥81.44 ($1.04) per share from ¥80.42
billion or ¥25.65 in the same quarter of prior fiscal year.
The increase in profits can be attributable to strong demand for
Toyota vehicles as well as positive impact from the company’s cost
control measures. However, profits were lower than the Zacks
Consensus Estimate of $1.62 per share.
Revenues in the quarter grew 18.2% to ¥5.41 trillion ($68.75
billion) on a 14.9% rise in sales volume to 2.16 million units.
Vehicle sales increased in all the regions, except Europe.
Operating income more then quadrupled to ¥340.61 billion ($4.33
billion) from ¥75.39 billion in the second quarter of previous
fiscal year.
However, Toyota projected lower consolidated vehicles sales of 8.75
million units for fiscal 2013 ending March 31, 2013, down 50
thousand units from the prior guidance. The automaker also lowered
its consolidated revenues outlook to ¥21.30 trillion (up 14.6% from
fiscal 2012) from the prior guidance of ¥22.00 trillion. The
downward revision of sales outlook was based on difficulties in
Chinese and European markets.
FORD MOTOR CO (F): Free Stock Analysis Report
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TOYOTA MOTOR CP (TM): Free Stock Analysis Report
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