Toyota Recalls Tacoma Trucks - Analyst Blog

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Toyota Motor Corp. ( TM ) plans to recall 150,000 units of Tacoma pickup truck in December that belongs to the 2001-2004 model years. The trucks will mainly be recalled in cold weather states in the U.S. and in Canada.

The company explained that metal lift plates holding the spare tires of the trucks are not sufficiently coated with phosphate at the time of manufacture, making them vulnerable to rust in cold weather states where salt is used on the roads to prevent ice in winter.

Toyota revealed that in extreme cases the lift plates could break due to excessive corrosion and detach from the vehicle. As a result, the company has decided to inspect the extent of corrosion in the lift plates and repair them at no extra charge if required.

The recall will cover 20 cold weather states in the U.S. including Connecticut, Delaware, Illinois, Indiana, Kentucky, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Virginia, Vermont, Wisconsin and West Virginia.

The past string of recalls has tarnished Toyota's reputation, resulting in declining sales and lower vehicle resale value. Since November 2009, the automaker has recalled more than 15 million vehicles globally in more than 20 recalls, surpassing all other automakers. The company lost its No.1 position to General Motors Company ( GM ) and Ford Motor Co. ( F ) in terms of sales volumes in the U.S.

The Transportation Department of U.S. had also imposed a fine of $48.4 million on the company in 2010 due to late recall of millions of defective vehicles. As a result, the automaker has become increasingly conscious to respond quickly to any problems in the vehicles.

  A few days back, Toyota announced plans to recall 11,000 units of Scion iQ mini cars due to a defect that is preventing their airbags from deploying properly. The recall will affect 2012-2013 model year iQs, manufactured between July 31, 2011 and October 12, 2012.

Prior to that, the company announced a worldwide recall of 2.77 million vehicles after its major recall of 7.43 million vehicles last month. The recall involved 14 models including the Prius hybrid and 2000-2006 Corolla compact sedans that are subject to inspection and repair due to a problem with their steering and water-pump systems.

  Last month's worldwide recall of 7.43 million vehicles included more than a dozen models manufactured between 2005 and 2010. The automaker needs to fix faulty power window switches in the vehicles that can cause fire because they didn't have grease applied properly during production.

Toyota, a Zacks #3 Rank (Hold) company, saw more than threefold increase in profits to ¥257.92 billion ($3.28 billion) or ¥81.44 ($1.04) per share in the second quarter of fiscal year ended September 30, 2012 from ¥80.42 billion or ¥25.65 in the same quarter of prior fiscal year.

The increase in profits can be attributed to strong demand for Toyota vehicles as well as positive impact from the company's cost control measures. However, profits were lower than the Zacks Consensus Estimate of $1.62 per share.

Revenues in the quarter grew 18.2% to ¥5.41 trillion ($68.75 billion) on a 14.9% rise in sales volume to 2.16 million units. Vehicle sales increased in all the regions, except Europe. Operating income more than quadrupled to ¥340.61 billion ($4.33 billion) from ¥75.39 billion in the second quarter of previous fiscal year.

However, Toyota projected lower consolidated vehicles sales of 8.75 million units for fiscal 2013 ending March 31, 2013, down 50 thousand units from the prior guidance. The automaker also lowered its consolidated revenues outlook to ¥21.30 trillion (up 14.6% from fiscal 2012) from the prior guidance of ¥22.00 trillion. The downward revision of sales outlook was based on difficulties in the Chinese and European markets.



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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: F , GM , TM

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