Toyota Motor Corp. (TM - Free Report) plans to recall 209,000 units of FJ Cruiser sports utility vehicles (SUVs) due to a problem with their front seatbelt retractors. The recalled SUVs are from the 2007–2013 model years.
Toyota revealed that the driver and front passenger seatbelts are mounted on the vehicle’s rear doors. The front seatbelts are usually mounted to a metal pillar between the front and back doors, but the FJ Cruiser is built without any such pillar. If the doors are slammed repeatedly for a certain period of time, cracks can form in the door panel around the seatbelt retractor and the retractor may become detached.
Toyota has not yet received any reports of injuries or accidents related to the problem. The automaker will repair the vehicles free of cost and begin notifying their owners by mail.
Since Nov 2009, the automaker has recalled about 20 million vehicles globally, surpassing all other automakers. The 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 a 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.
A few months back, Toyota had announced a major worldwide recall of 7.43 million vehicles that included more than a dozen models manufactured between 2005 and 2010. The recall was related to faulty power window switches in the vehicles that can cause fire because they did not have grease applied properly during production.
Despite these, Toyota recaptured the sales crown from General Motors Company (GM - Free Report) by selling 9.75 million vehicles globally in 2012, which exceeded GM’s sales of 9.29 million vehicles. Germany’s Volkswagen AG (VLKAY - Free Report) came third with sales of 9.07 million vehicles for the year. Toyota’s victory can be attributed to its impressive product lineups and marketing initiatives.
Surprisingly, sales in the company’s domestic market surged 35% despite its sluggish economy. Sales of the company’s domestic rival Honda Motor Co. (HMC - Free Report) grew 19% to 3.82 million vehicles in the year.
The automaker lost its No.1 position to GM in 2011 after gaining the title from GM in 2008. The loss of crown was driven by declining reputation due to a series of safety recalls as well as negative impact from natural disasters in Japan and Thailand in 2011. However, Toyota had vowed to regain the top position by increasing its dependence on the non-U.S. markets, especially the high growth emerging markets.
Toyota, a Zacks Rank #4 (Sell) stock, posted a 22.2% rise in earnings per share to ¥31.55 (39 cents) in the third quarter of fiscal 2013 ended on Dec 31, 2012 from ¥25.81 in the same quarter of prior fiscal year. Earnings were lower than the Zacks Consensus Estimate of $1.23 per share.
Net income rose 23.4% to ¥99.91 billion ($1.23 billion) from ¥80.94 billion a year ago. The increase was attributable to lower provision for income taxes during the quarter.
Revenues increased 9.3% to ¥5.32 trillion ($65.56 billion) on a 7.3% rise in unit sales to 2.11 million vehicles. Among all the geographic markets, unit sales rose at the fastest pace in Asia (53.4%) and declined at the fastest pace in Japan (15.0%).
Operating income dipped 16.7% to ¥124.76 billion ($1.54 billion) from ¥149.68 billion in the third quarter of previous fiscal year. The decline was attributable to a 10.1% rise in costs and expenses during the quarter.
For fiscal 2013 ending Mar 31, 2013, Toyota raised its consolidated vehicles sales guidance to 8.85 million units from 8.75 million units. Consequently, the automaker projected higher consolidated revenues of ¥21.80 trillion (reflecting an expected increase of 17.3%) compared with fiscal 2012. The upward revision of sales outlook was based on higher overseas vehicle sales, primarily in North America.