Harley Recalls - Analyst Blog

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Harley-Davidson Inc. ( HOG ) has recalled 8,723 motorcycles in Japan in order to fix a problem with the brake-light switches that could possibly result in the failure of the rear brakes.

At the end of last month, Harley revealed that it would recall a total of 308,000 motorcycles due to the same problem. Among them, the company will recall 251,000 motorcycles in the U.S. and the rest in other countries.

In its filing with the National Highway Traffic Safety Administration, the company stated that heat from the exhaust system could cause brake lights to fail as well as the brake fluid to leak, ultimately leading to rear-brake failure.

The recall affected models including CVO Touring and Trike from the 2009-2012 model years. They were manufactured between June 6, 2008 and September 16, 2011.

Harley decided to install a rear brake light switch kit in the motorcycles free of cost. The recall, expected to cost $10 million-$12 million to Harley, will be charged in the fourth quarter of the year.

Automotive safety recalls were brought into focus by the media after Toyota Motors ' ( TM ) announcement of the largest-ever global recall of 14 million vehicles since November 2009.

The Japanese automaker's recall was related to problems such as faulty accelerator gas pedals and slipping floor mats as well as defective braking systems. The Transportation Department of U.S. also imposed a fine of $48.4 million due to the late recall of defective vehicles.

Harley, a Zacks #3 Rank (Hold) company, posted a 95.9% rise in profit to $183.6 million in the third quarter of the year from $93.7 million in the same quarter a year ago. On per share basis, profits rose to 78 cents from 40 cents, exceeding the Zacks Consensus Estimate by 4 cents. The increase in profit was attributable to higher shipment volume.

Total revenue rose 11% to $1.40 billion, driven by the rise in motorcycle and related products revenues. It was higher than the Zacks Consensus Estimate of $1.30 billion. Operating income surged 59.3% to $242.7 billion from $152.4 million in the third quarter of 2010.


 
HARLEY-DAVIDSON ( HOG ): Free Stock Analysis Report
 
TOYOTA MOTOR CP ( TM ): Free Stock Analysis Report
 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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Referenced Stocks: HOG , TM

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