Product recalls are the precautionary steps to avoid any glitch in a vehicle that may lead to accidents. However, the recalls dent a brand's image and the 0.4% fall in Toyota Motor Corp. 's ( TM ) shares on Oct 18 was a reflection of that. The automaker announced on Oct 17 that it is recalling 885,000 Camry, Avalon, and Venza vehicles worldwide to fix a problem in the air conditioning condensers.
Toyota has made several recalls of late and the drop in share price might be a reflection of shareholders' fading confidence owing to that. Product recalls, amid the competitive scenario, not only affect the brand but causes certain financial damage as well.
Toyota is recalling 803,000 Camry of model years 2012-2013 in the U.S. Additionally, 44,000 vehicles from Canada, 10,600 from Mexico, and 9,100 from Saudi Arabia are being recalled. The remaining vehicles will be recalled from 15 other countries.
Toyota said that the problem in the air-conditioning condenser may cause leakage of water into the airbag control modules. This can lead to short circuits or the airbag might inflate when not required and the power steering may also default. So far 2 minor injuries have been reported but there have been no casualties.
Toyota's Largest Recall
Automotive safety recalls were brought into focus by media after Toyota's announcement of the largest global recall of 3.8 million vehicles in Sep 2009, triggered by a high-speed crash that claimed 4 lives. Later on, Toyota had to face numerous personal injury and wrongful death lawsuits in federal courts, hampering its image.
Toyota's Series of Recalls of Late
In Jul 2013, Toyota announced that it would recall 185,000 units of some subcompact car models globally due to a problem with their electric power steering system. The glitch was making the steering heavier. The recalled vehicles include Yaris (know as Vitz in Japan) and Verso-S (aka Lactis in Japan) subcompact models. The recalled Yaris vehicles were manufactured between Nov 2010 to Mar 2012 while Vero-S vehicles were made between Aug 2010 and Aug 2011.
In Aug 2013, Toyota recalled around 342,000 Tacoma midsize pickup trucks to fix faulty front seat belts. The recall involved car models from 2004-2011.
In early Sep 2013, one year after Toyota recalled 780K vehicles to fix a problem in the rear tie rod, the company recalled the vehicles again after reports that the problem remained, reported The New York Times. The company had recalled 18K 2010 Lexus HS 250h autos and 760K Toyota RAV4 SUV of model years 2006 to 2011 in Aug 2012, following several complaints.
Again in Sep, the automaker recalled 369,000 vehicles worldwide, including about 235,000 in the U.S., roughly 74,000 in Japan and 37,500 in Europe. This included 200,000 Highlander Hybrid models manufactured from 2006 to 2010 and Lexus RX 400h vehicles developed during 2006 to 2008 to fix a hybrid-system problem. Toyota also recalled another 169,000 vehicles including Lexus IS 350, IS 350C and GS 350 made between 2006 and 2011. Toyota recalled these vehicles to repair an engine bolt defect.
Later in Sep 2013, Toyota recalled 615,000 Sienna minivans in the U.S. The automaker recalled the vehicles of model years 2004-2005 and 2007-2009 to fix a problem in the shift lever assembly.
Recalls by other Automakers
Other than Toyota, many other players in the automobile market are witnessing a series of recalls. In Aug 2013, Dongfeng Honda Automobile Co., the Chinese arm of Honda Motor Co., Ltd. ( HMC ), announced that it is recalling all Siwei CR-V vehicles manufactured from Mar 2, 2010, to Aug 30, 2012 to fix a defective front shock absorber piston rod. Honda recalled almost 408,000 SUVs.