Toyota Motor Corp. (TM) has announced that it will recall about 110,000 of its Sienna minivans globally due to a problem with its braking system. The defective vehicles are manufactured before November 5, 2010.
The automaker has revealed that there is a light switch bracket located close to the parking brake, which could get damaged while operating the parking brake. The damage could ultimately cause the brake lights to stay on and it could impair the braking system over time.
The recall includes 94,000 vehicles in the U.S., 12,000 units in Canada and 5,000 units in Mexico. The automaker stated that it is not aware of any accidents or injuries related to the problem and it would notify owners about the problem in January next year. However, it will not be able to fix the vehicles until replacement parts are available in February.
Sienna would be the second lineup to be recalled (after Prius) for problems related to the braking system. During the February Prius, Toyota recalled 397,000 units of Prius worldwide due to a problem with the anti-lock braking systems.
The past string of recalls has already tarnished Toyota’s reputation, resulting in declining sales, lower vehicle resale value and fallen stock price. In the first 9 months of 2010, the automaker’s sales in the U.S. increased by a tad 1.1% on a year-over-year basis, the lowest among the major automakers. The company’s market share also fell to 15.2% from 16.6% in the same period a year ago.
Since September last year, Toyota has recalled about 11 million vehicles globally in greater than 15 recalls, more than any other automaker. Apart from defective braking systems, the recalls were related to problems such as faulty accelerator gas pedals and slipping floor mats.
Despite the backlash from safety recalls, Toyota showed a fivefold increase in profit to ¥115.5 billion ($1.34 billion) or ¥31.47 per share (37 cents) in the second quarter of its fiscal 2011 from ¥22.19 billion ($258.26 million) or ¥6.96 per share (8 cents) in the same quarter of previous fiscal year. The profit was boosted by the marketing strategy as well as cost reduction measures incorporated by the company during the quarter.
As a result, Toyota retains a Zacks #3 Rank on its stock, which translates to a recommendation of Hold for the short term (1–3 months). In line with this, we also reiterate our Neutral recommendation on the stock for the long term (more than 6 months).
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