Honda Recalls CR-V Globally - Analyst Blog

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Honda Motor Co. ( HMC ) plans to recall 489,000 units of its popular sports utility vehicle, CR-V, in order to fix the faulty power window switches. Among them, 268,655 units will be recalled in the U.S.

The recalled vehicles were manufactured between February 19, 2002, through July 28, 2006. Nearly 265,000 of the vehicles were manufactured at Honda's East Liberty plant, while the others have been imported from Japan.

The Japanese automaker revealed that window switches could cause electrical fires if rainwater or other fluids enter the switch through an open driver's window and seep into the master power window switch on the driver's door.

Honda has not yet received any reports of crash or injuries, except four switch fires, due to the problem. The company will start sending notification to the vehicle owners in early November. The dealers will inspect the switches and repair them if necessary, free of charge.

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 September 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. The Transportation Department of U.S. had also imposed a fine of $48.4 million on the company due to late recall of millions of defective vehicles.

Recently, Honda expanded its May recall to fix defective power steering hose by including 572,000 units of Accord V6 midsize sedan in the U.S. The vehicles belong to 2003-2007 model years. The May recall for power steering hoses involved 56,881 units of 2007-2008 Acura TL sedans in North America.

From the beginning of 2011 till date, Honda's largest recall included 1.5 million cars in the U.S. due to a problem with the transmission system. The recall included CR-V (model year 2007-2010), Elements (2005-08) and Accords with 4-cylinder engines (2004-10).

Honda, a Zacks #5 Rank (Strong Sell), recorded more than a fourfold increase in profits to ¥131.72 billion ($1.66 billion) or ¥73.09 (92 cents) per share in the first quarter of its fiscal year ending March 31, 2013 from ¥31.80 billion or ¥17.64 in the comparable quarter of 2011. However, the company's profits were lower than the Zacks Consensus Estimate of $1.15 per share.

Consolidated net sales and other operating revenues surged 42.1% to ¥2.44 trillion ($30.71 billion), driven by higher revenues in the automobile business with the recovery in production from the twin disaster in Japan last year, and increased revenues in the motorcycle business, despite unfavorable foreign currency translation effects.

Consolidated operating profits increased significantly by 679.5% to ¥176.01 billion ($2.22 million) from ¥22.58 billion a year ago, driven by higher sales volume and model mix, despite increased SG&A and R&D expenses as well as unfavorable foreign currency effects.

Honda has projected revenues to improve 29.6% to ¥10.30 trillion in fiscal 2013. Operating profits are expected to increase 168.0% to ¥620 billion, net profits are anticipated to rise 122.2% to ¥470 billion and earnings per share are expected to be ¥260.78 for the year.
 


 
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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.



This article appears in: Investing , Business , Stocks

Referenced Stocks: HMC , TM

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