Honda Motor Co.
) plans to recall 46,000 units of its Fit multi-purpose vehicles
(MPVs) in the U.S. and Canada in order to fix their defective
electronic stability control systems. Fit, also known as Honda
Jazz in some non-U.S. markets, is a five-door mini MPV, first
introduced in June 2001.
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Honda's decision to recall the vehicles mainly stemmed from a
test conducted by the U.S. National Highway Traffic Safety
Administration (NHTSA). The NHTSA test revealed that the vehicles
have the tendency to tilt excessively on sharp turns and lose
tire traction, which can increase the risk of an accident.
Honda will recall 43,782 Fits in the U.S. from model years 2012
and 2013. The remaining 2,000 units of the vehicle will be
recalled in Canada.
Honda decided to begin notifying Fit owners on May 17. The
company has not yet received any reports of accidents or injuries
related to the problem in the vehicles.
Automotive safety recalls were brought into focus by media after
) 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
Recently, another major Japanese automaker
Nissan Motor Co.
) recalled 123,308 units of Nissan Altima mid-size cars from
model year 2013 in order to fix a potential problem with their
tires, which may have been significantly over or under-inflated.
Honda, a Zacks Rank #4 (Sell) stock, reported an 8% rise in
earnings to ¥75.8 billion ($805 million) or ¥42.03 (45 cents) per
share in the fourth quarter of the fiscal year ended Mar 31, 2013
from ¥71.6 billion or ¥39.72 in the same quarter of prior fiscal
year. However, earnings lagged the Zacks Consensus Estimate by 18
cents during the quarter.
Consolidated net sales and other operating revenues grew 14.1% to
¥2.7 trillion ($29.2 billion). The increase was attributable to
improved revenues in automobile business operations as production
recovered from the impact of Thai flood as well as favorable
foreign currency translation effects.
Consolidated operating profit rose 21.4% to ¥136.0 billion ($1.4
billion) from ¥112.0 billion in the fourth quarter of fiscal
2012, driven by positive impact from cost reduction measures and
favorable foreign currency effects, partially offset by higher
R&D and SG&A expenses.
For fiscal 2014, Honda has projected revenues to increase 22.5%
to ¥12.1 trillion. Operating profit is expected to surge 43.2% to
¥780 billion and profits are anticipated to jump 58.0% to ¥580
billion or ¥321.81 per share. The company expects higher
revenues, favorable model mix and effective cost reduction
measures to contribute to the increase in profits during the
) with a Zacks Rank #2 (Buy) is performing well in the global