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Honda Motor Co. (HMC - Analyst Report) plans to recall 225,300 units of SUVs and minivans in the U.S. and Canada due to a problem that increases the risk of a rollaway accident. The company has revealed that due to an issue with the brake-shift interlock mechanisms, the vehicles could shift out of the park position without applying the brakes. It has also noticed that the problem occurs when the temperature is below freezing.
In the U.S., Honda will recall 128,000 units of CR-V SUVs, 59,000 units of Honda Odyssey minivans from the 2012 and 2013 model years, and 17,500 units of Acura RDX SUVs from the 2013 model year. The company will replace a part of the brake-shift interlock system. In Canada, Honda will recall 14,000 units of CR-Vs, 4,500 units of Odysseys and 2,300 units of RDXs.
Honda revealed that it has not yet received any reports or customer complaints regarding accidents or injuries related to the problem.
Last month, Honda announced plans to recall 250,000 vehicles around the world also due to a problem with the braking system. The problem lied with the Vehicle Stability Assist control unit in the vehicles that can cause the car to brake when the driver does not press the brake pedal.
Honda revealed that an electrical capacitor on the Vehicle Stability Assist unit may have been damaged while manufacturing. As a result, the Vehicle Stability Assist unit could malfunction and apply brake for less than a second even when the driver is not pressing the brake pedal. The malfunction could also result in a brake force that could exceed the driver’s intended input.
The Vehicle Stability Assist unit in Honda vehicles assists drivers in maintaining control in abrupt braking, particularly on slippery grounds. The unit reduces power to the wheels and lowers the impact of braking; saving the vehicle from being skidded away.
Automotive safety recalls were brought into focus by media after Toyota Motors’ announcement of the largest-ever global recall of 3.8 million vehicles in Sep 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. Last year, the Transportation Department of U.S. slapped a fine of $17.35 million on Toyota due to late response regarding a defect in its vehicles to safety regulators as well as late recall of those vehicles.
According to the department, it was the maximum allowable fine under the law for not initiating a recall in a timely manner. The latest fine adds to $48.4 million imposed by the U.S. government on the company in 2010 due to late recall of millions of defective vehicles.
Honda, a Zacks Rank #4 (Sell) stock, reported a 62.5% increase in profits to ¥77.4 billion ($894.0 million) in the third quarter of fiscal 2013 ended Dec 31, 2012 from ¥47.7 billion in the same quarter of prior fiscal year. Earnings per share rose 62.5% to ¥42.97 (57 cents) from ¥26.45 in the fiscal-2012 quarter
Revenues in the quarter escalated 24.9% to ¥2.4 trillion ($28.1 billion), driven by increased revenues from the company’s automobile business with the recovery of production from the impact of the flooding in Thailand.
Operating income nearly doubled to ¥131.9 billion ($1.5 billion) from ¥44.3 billion in the prior year, driven by higher sales volume and model mix as well as the impact cost reduction measures, partially offset by increased SG&A and R&D expenses.
Honda has projected revenues to rise 23.3% to ¥9.8 trillion in fiscal 2013. Operating profit is expected to improve 124.8% to ¥520.0 billion, net profit is anticipated to go up by 75.0% to ¥370.0 billion and earnings per share are expected to be ¥205.29 for the year.
Few stocks that are performing well in the industry where Honda operates include Daimler AG (DDAIF) and Peugeot S.A. (PEUGY). Both carry a Zacks Rank #2 (Buy).