Honda Recalls Minivans, SUVs - Analyst Blog
April 22 2013 - 2:02PM
Zacks
Honda Motor Co. (HMC) plans to recall 225,300
units of SUVs and minivans in the U.S. and Canada due to a problem
that increases the risk of a rollaway accident. The company has
revealed that due to an issue with the brake-shift interlock
mechanisms, the vehicles could shift out of the park position
without applying the brakes. It has also noticed that the problem
occurs when the temperature is below freezing.
In the U.S., Honda will recall 128,000 units of CR-V SUVs, 59,000
units of Honda Odyssey minivans from the 2012 and 2013 model years,
and 17,500 units of Acura RDX SUVs from the 2013 model year. The
company will replace a part of the brake-shift interlock system. In
Canada, Honda will recall 14,000 units of CR-Vs, 4,500 units of
Odysseys and 2,300 units of RDXs.
Honda revealed that it has not yet received any reports or customer
complaints regarding accidents or injuries related to the
problem.
Last month, Honda announced plans to recall 250,000 vehicles around
the world also due to a problem with the braking system. The
problem lied with the Vehicle Stability Assist control unit in the
vehicles that can cause the car to brake when the driver does not
press the brake pedal.
Honda revealed that an electrical capacitor on the Vehicle
Stability Assist unit may have been damaged while manufacturing. As
a result, the Vehicle Stability Assist unit could malfunction and
apply brake for less than a second even when the driver is not
pressing the brake pedal. The malfunction could also result in a
brake force that could exceed the driver’s intended input.
The Vehicle Stability Assist unit in Honda vehicles assists drivers
in maintaining control in abrupt braking, particularly on slippery
grounds. The unit reduces power to the wheels and lowers the impact
of braking; saving the vehicle from being skidded away.
Automotive safety recalls were brought into focus by media after
Toyota Motors’ (TM) announcement of the
largest-ever global recall of 3.8 million vehicles in Sep 2009,
triggered by a high-speed crash that killed 4 members of a
family.
Later on, a string of recalls has led Toyota to face numerous
personal injury and wrongful death lawsuits in federal courts. Last
year, the Transportation Department of U.S. slapped a fine of
$17.35 million on Toyota due to late response regarding a defect in
its vehicles to safety regulators as well as late recall of those
vehicles.
According to the department, it was the maximum allowable fine
under the law for not initiating a recall in a timely manner. The
latest fine adds to $48.4 million imposed by the U.S. government on
the company in 2010 due to late recall of millions of defective
vehicles.
Honda, a Zacks Rank #4 (Sell) stock, reported a 62.5% increase in
profits to ¥77.4 billion ($894.0 million) in the third quarter of
fiscal 2013 ended Dec 31, 2012 from ¥47.7 billion in the same
quarter of prior fiscal year. Earnings per share rose 62.5% to
¥42.97 (57 cents) from ¥26.45 in the fiscal-2012 quarter
Revenues in the quarter escalated 24.9% to ¥2.4 trillion ($28.1
billion), driven by increased revenues from the company’s
automobile business with the recovery of production from the impact
of the flooding in Thailand.
Operating income nearly doubled to ¥131.9 billion ($1.5 billion)
from ¥44.3 billion in the prior year, driven by higher sales volume
and model mix as well as the impact cost reduction measures,
partially offset by increased SG&A and R&D expenses.
Honda has projected revenues to rise 23.3% to ¥9.8 trillion in
fiscal 2013. Operating profit is expected to improve 124.8% to
¥520.0 billion, net profit is anticipated to go up by 75.0% to
¥370.0 billion and earnings per share are expected to be ¥205.29
for the year.
Few stocks that are performing well in the industry where Honda
operates include Daimler AG (DDAIF) and
Peugeot S.A. (PEUGY). Both carry a Zacks Rank #2
(Buy).
DAIMLER AG (DDAIF): Free Stock Analysis Report
HONDA MOTOR (HMC): Free Stock Analysis Report
PEUGEOT CIT-ADR (PEUGY): Get Free Report
TOYOTA MOTOR CP (TM): Free Stock Analysis Report
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