Honda Motor Co. (HMC) plans to recall about a million unit of its five-door hatchback subcompact car, Fit, in the U.S. The recall will fix problems with their lost motion springs.
Lost motion spring, a component within the engine’s valve train, is a type of Variable valve actuation (VVA) system that is used to alter the shape or timing of a valve lift event within an internal combustion engine. The timing, duration and lifting of these valves have a significant impact on the engine performance.
The automaker noticed that the vehicles’ lost motion springs could bend or break over time and produce unusual engine noise, thereby causing the engine to damage or stall. The company has not yet received any reports of crashes or injuries due to the problem.
Honda has decided to notify the owners of 97,201 units of affected vehicle in March. It will ask the owners to bring their vehicles to authorized dealers after receiving the mail notification.
In December last year, Honda recalled 10,800 units of Accord sedans and Pilot sport utility vehicles (SUVs) in order to a fix a problem with the front suspension of the vehicles. The recall includes Accord sedans of model year 2010-2011 and Pilot SUVs of 2011, sold in the U.S.
Since the beginning of 2010, Honda has 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.
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.
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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