Toyota Motor Corp.
) extended its safety recall saga by announcing a "service
campaign" to fix a problem with the control mechanism in the
exhaust system of its famous Prius hybrid cars.
The Japanese automaker would recall 8,000 units of Prius Alpha
hatchback wagons in Japan and about 20,000 units of the same
vehicle in North America, where it is marketed as Prius V. The
vehicles belong to the model year 2011-12.
The automaker noticed that actuators, control mechanisms in the
exhaust-heat-recovery systems, have weakened and could cause engine
coolants to leak. The leakage could make the hybrid system's
warning light to turn on, leading the car to run in safe mode.
Toyota occupied the No.1 spot in hybrid offerings after
introducing Prius in 1997. Last month, Prius' sales leapt 54.3% to
The company introduced Prius Alpha in May last year. It has been
derived from the third generation Prius model and is equipped with
nickel-metal hydride (NiMH) batteries like its predecessor.
The past string of recalls has tarnished Toyota's reputation,
resulting in declining sales and lower vehicle resale value. Since
November 2009, Toyota has recalled more than 15 million vehicles
globally in more than 20 recalls, surpassing all other
In March, Toyota announced recall of nearly 700,000 vehicles due
to two separate problems. The major part of the recall comprised
495,000 units of Tacoma trucks from the model years 2005-2009. It
is related to a defective steering wheel mechanism that could rub
against a cable assembly and damage the electrical connection. The
electrical glitch could disable the airbag mechanism, thereby
increasing the risk of injury in a crash.
The second set of recall involved 70,500 units of Camry from the
2009 model year and 116,000 units of Venza from the 2009-2011 model
year. It is driven by silicon grease that may have gotten inside
the stop-lamp switch at the factory due to improper installation.
The defect could lead to electrical resistance in the vehicles.
Last week, Toyota also announced recall of 70,000 units of
Vista, Corona, and Nadia models due to a problem with their engine
bolts that could break while the vehicles are in motion. The
automaker also plans to recall 834 units of Hiace and Regius Ace
wheelchair-accessible vehicles in Japan in order to meet a safety
Toyota, a Zacks #2 Rank ("Buy") company, posted an 8.3% fall in
profit to ¥101.7 billion ($2.6 billion) in the third quarter of
fiscal year ended December 31, 2011 from ¥110.9 billion in the same
quarter of prior fiscal year. On per share basis, profits were
¥25.81 (67 cents) versus ¥29.86 in the third quarter of fiscal
2011, exceeding the Zacks Consensus Estimate of 27 cents. However,
revenues in the quarter grew 4% to ¥4.9 trillion ($126.3
The continuous decline in profits was attributable to
disruptions in supply of parts caused by the earthquake and tsunami
in Japan on March 11, 2011 as well as due to floods in Thailand in
the second half of 2011, and due to continued appreciation of yen
Meanwhile, Toyota's compatriot
Honda Motor Co.
) reported a 41% decline in profits to ¥47.6 billion ($613 million)
or ¥26.45 (34 cents) per share in the third quarter of fiscal 2012
from ¥81.1 billion or ¥45.01 per share in the same quarter of prior
fiscal year. Revenues in the quarter dipped 8% to ¥1.9 trillion
($25.0 billion), driven by lower revenues due to the same factors
Recently, Toyota raised its 2012 sales forecast for the U.S. due
to improving consumer confidence, rising gasoline prices and strong
pent-up demand on the back of aging vehicles on road (average age
of a vehicle on U.S. roads is 10.8 years).
The Japanese automaker expects to boost sales by 15% to 1.89
million vehicles in the U.S. during the year. The company believes
rising gasoline prices would raise the demand for its
HONDA MOTOR (
): Free Stock Analysis Report
TOYOTA MOTOR CP (
): Free Stock Analysis Report
To read this article on Zacks.com click here.