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Toyota Motor Corp. (TM - Analyst Report) recalled 91,198 units of four truck models in Japan after receiving many reports of malfunctioning with their exhaust and fuel pipes. The recalled models include HiAce van and Dyna truck.
According to the Land, Infrastructure, Transport and Tourism Ministry in Japan, the exhaust pipes in these models were manufactured between August 2007 and August 2010. The authority has mentioned that exhaust pipes in the vehicles could rupture due to vibrations while the vehicles are in motion and fuel pipes could leak due to improper installation.
Since September 2008, Toyota received about 400 reports of malfunction in the vehicles due to the same problem. The company has also exported 58,000 units of the defective vehicles to many countries, which would be recalled afterwards.
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 automakers.
Recently, the automaker announced a “service campaign” to fix a problem with the control mechanism in the exhaust system of its famous Prius hybrid cars. The automaker recalled 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.
Toyota, a Zacks #1 Rank (Strong Buy) stock, posted a 30.5% decline in profits to ¥283.56 billion ($3.7 billion) or ¥90.20 ($1.17) per share in its fiscal year ended March 31, 2012 compared with ¥408.18 billion or ¥130.16 in the prior fiscal year. With this, the company missed the Zacks Consensus Estimate of $2.52 per share for the year.
Consolidated revenues in the year dipped marginally by 2% to ¥18.58 trillion ($241.59 billion). Total unit sales increased 0.6% to 7.35 million units during the fiscal year. Higher unit sales in Japan (8%), Europe (0.3%) and Asia (6%) were significantly offset by lower sales in North America (8%) and Other reporting regions (2%).
The decrease in revenues and profits was attributable to challenges faced by the company owing to the earthquake in Japan and severe flooding in Thailand in 2011 as well as unprecedented strength of the yen.
Meanwhile, Toyota’s compatriot Honda Motor Co. (HMC - Analyst Report) revealed a steep 61% increase in profits to ¥71.6 billion ($871 million) in the fourth quarter of the fiscal 2012 ended March 31, 2012 from ¥44.6 billion in the same quarter of prior fiscal year. On per share basis, profits were ¥39.72 (48 cents) in the quarter versus ¥24.72 in the prior year, missing the Zacks Consensus Estimate of 62 cents.
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