Honda Motor Co. (HMC) announced that it will recall 21,700 units of new Civic compact car and 33,000 units of Odyssey minivans in order to fix leaking fuel tanks and faulty windshield wiper rods, respectively. The recalled vehicles belong to the 2011 model year.
Honda revealed that a plastic case that covers a valve in the fuel pump module could break or crack in the Civic. This, in turn, could result in a fuel leak in a rollover crash, thereby leading to a fire. The company stated that more than 18,000 Civics will be recalled in the U.S. and more than 3,600 units in Canada.
In the case of Odyssey, Honda revealed that the windshield wiper linkage rod could bend if the windshield wipers are burdened with heavy ice on being switched on. A bent wiper linkage rod could prevent the front wipers from operating normally.
The company’s dealers will inspect the fuel pump module on the Civic and replace it if required at free of cost. The automaker asserted that about 1% of the recalled vehicles are likely to encounter the problem. On the other hand, dealers will replace the windshield wiper linkage rod on the Odyssey.
Honda has not received any reports of injuries or rashes related to the problem. Both recalls are anticipated to begin by mid-April.
Automotive safety recalls were brought into focus by media after Toyota Motors’ (TM) announcement of the largest-ever global recall of about 11 million vehicles since September last year. The automaker made greater than 15 recalls, more than any other automaker. They were related to problems associated with faulty accelerator gas pedals, slipping floor mats and defective braking systems.
Since the beginning of 2010, Honda recalled more than 1 million vehicles due to problems related to air bag inflators and faulty ignition systems. The recalled lineups include Accord, Civic, Odyssey, CR-V, Pilot, Acura TL and Acura CL in the U.S. as well as the Inspire, Saber and Lagreat in Japan.
Last month, the automaker has recalled about a million units of its five-door hatchback subcompact car, Fit, in the U.S. The recall aimed at fixing problems with the lost motion springs.
Honda, a Zacks #3 Rank (Hold) stock, posted a 40% decline in profit, reaching ¥81.12 billion ($995 million) or ¥45.01 (55 cents) per share in the third quarter of its fiscal 2011 from ¥134.63 billion or ¥74.19 per share in the same quarter of prior fiscal year. The fall in profit was attributable to decrease in automobile unit sales in all the regions, except North America.
Consolidated net sales and other operating revenues in the quarter slipped 6% to ¥2.11 trillion ($25.90 billion) on the back of unfavorable currency translation and lower automobile sales in Japan, despite increased revenues from the motorcycle business in the Asian countries. At constant exchange rates, Honda’s revenues decreased 0.8%.
Consolidated operating profit ebbed 29% to ¥125.65 billion ($1.54 billion) from ¥176.97 billion. This was attributable to increased selling, general and administrative (SG&A) and research and development expenditures as well as unfavorable foreign currency exchange movements that more than offset the positive impact from better model mix and ongoing cost reduction measures.
For the full fiscal year 2011 ending March 31, 2011, Honda projected a 3.7% increase in revenues to ¥8.9 trillion compared with the earlier projection of a 4.9% increase in net sales and other operating revenues to ¥9 trillion ($108.59 billion).
Operating profit expected to increase 70.4% to ¥620 billion compared with the earlier projection of an increase of 37.4% to ¥500 billion. The net profit is anticipated to grow 97.5% to ¥530 billion compared with the earlier guidance of an 86.3% rise in profit to ¥500 billion. Earnings per share are expected to be ¥293.41 compared with the earlier outlook of ¥276.80.
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