Nissan Makes Two Recalls - Analyst Blog

Nissan Motor Co. ( NSANY ) announced that it will recall 34,000 units of Sentra compact cars due to a problem with their battery cables, causing the engines to stall. The recall includes 2010 and 2011 model year vehicles that are equipped with MR-20 engines and manufactured between May 11, 2010 and May 22, 2010, and July 8, 2010 and October 25, 2010.

The automaker revealed that a thick zinc coating on the cable bolts is leading to voltage drop that can damage the computerized engine control. Due to the defect, the cars can stall in motion and it may not be possible to restart them, thereby increasing the risk of a crash. The company has decided to replace the battery cables and covers free of charge starting on or before January 23, 2012.

Nissan also plans to recall 28,294 units of Juke small crossover SUVs due to a problem with their turbocharger boost sensor bracket that can break free from an air inlet tube resulting from a defective welding. The problem could cause the vehicle to stall and may lead to a crash.

The 2011 model year Jukes were manufactured between April 9, 2010 and May 12, 2011. Nissan has decided to check the brackets and replace them free of charge if necessary. It will start recalling the vehicles from January 9, 2012.

Automotive safety recalls were brought into focus by the 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. also imposed a fine of $48.4 million on the company due to late recall of millions of defective vehicles.

Nissan, a Zacks #1 Rank (Strong Buy) company, posted a 12% fall in profit to ¥183.4 billion ($2.3 billion) in the first half of fiscal 2012 due to a strong yen that more than offset the positive impact from its recovery from the twin disaster in Japan in March. Sales inched up marginally by 1.1% to ¥4.367 trillion ($54.73 billion) during the period.

During the second quarter ended September 30, 2011, the company's profit ebbed 3% to ¥98.4 billion ($1.2 billion) from ¥101.7 billion in the same period a year ago.

Despite the disappointing results, the automaker lifted its annual forecast of profit to ¥290 billion from the previous outlook of ¥270 billion.

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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 Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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