Toyota Motor Corp. (TM) announced that it would recall 549,000 cars worldwide, mostly in the U.S. due to a problem with the vehicles’ engines that could make it harder to steer.
The automaker would recall 447,000 vehicles in North America, This includes 283,200 units of Toyota brand cars such as 2004 and 2005 Camry, Highlander, Sienna and Solara, 2004 Avalon and the 2006 Highlander HV as well as 137,000 units of Lexus vehicles, including the 2004 and 2005 ES330 and RX330 and 2006 RX400h.
The company would also recall 38,000 vehicles in Japan, 25,000 vehicles in Australia and New Zealand, 14,000 vehicles in Europe, 10,000 vehicles in the Middle East and 14,000 vehicles in Asia, outside Japan. The recalled models in these regions include Alphard, Highlander, Highlander hybrid and some Lexus models
The automaker stated that the outer ring of the engine’s crankshaft pulley may become misaligned with the inner ring, causing noise or emitting warning signals. If the problem persists, the belt for the power steering pump may become detached from the pulley, making it more difficult to turn the steering wheel.
Toyota received 79 reports related to the problems in the vehicles dating back to 2007. However, there have been no reports of accidents or injuries due to the problems.
In the U.S., Toyota decided to notify owners of the vehicles once replacement parts have been produced in sufficient quantities. However, if the problems become severe, the automaker has requested owners to make an appointment with any Toyota or Lexus dealer for inspection of the vehicle.
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 14 million vehicles globally in about 20 recalls, surpassing all other automakers. The Transportation Department of U.S. also imposed a fine of $48.4 million due to late recall of millions of defective vehicles.
The Zacks #4 Rank (Sell) posted an 18.5% fall in profit to 80.42 billion ($1.03 billion) in the second quarter of fiscal year ended September 30, 2011 from 98.69 billion in the same quarter of prior fiscal year. On per share basis, profits were 25.65 (33 cents) versus 31.47 in the second quarter of fiscal 2011, missing the Zacks Consensus Estimate of 52 cents.
The continuous decline in profit was attributable to a fall in production volumes and sales volumes all over the world, especially Japan, North America and Europe due to disruptions in supply of parts caused by the earthquake and tsunami in Japan on March 11, 2011.
Further, Toyota failed to provide any guidance for vehicle unit sales, net revenues and earnings for the fiscal year ending March 31, 2012 as it needs more time to complete the examination of production and sales plans due to the impact of floods in Thailand.
