Product recalls are the precautionary steps taken to avoid accidents due to any glitch in a vehicle. However, the recalls dent the company’s image and the 0.8% fall in Toyota Motor Corp.’s (TM) shares on Mar 11 highlights that. The decline was due to the news that Toyota has recalled 7,067 of its new Highlander crossover SUVs. The recall is being made to fix a problem in the seat belts.
The recalled Highlander crossovers are from model year 2014. According to The National Highway Traffic Safety Administration, the middle seat belt of the third row is not properly secured to the vehicle’s floor. In case of a crash, a faulty seat belt will increase the probability of injury. However, no cases of casualties have been reported.
Toyota will be recalling the vehicles later this month. The Toyota dealers will service the recalled Highlanders at no extra charge. Toyota had commercialized the third-generation Highlander this year.
The new 2014 Highlander comes with a new look, a sophisticated cabin and better safety and technology. It offers a choice between a four-cylinder, a V-6 and a hybrid engine.
Toyota witnessed several recalls in Feb 2014. On Feb 12, the automaker announced the global recall of 1.9 million third-generation Prius cars to repair a software problem in the hybrid system. Following this, on Feb 14, Toyota recalled 295,000 vehicles of the Lexus and Toyota brands globally due safety system problems involving stability control and anti-lock brakes. 261,114 of the total recalled vehicles of model years 2012 and 2013 were in the U.S.
Moreover, on Feb 17, Toyota announced its intent to recall 13,000 FJ Cruiser sport-utility vehicles in the Middle East, Australia, Africa and Panama. The recall will be made to rectify fuel tubes prone to overheating, which may cause them to melt, leading to gas leaks. This defect has led to five fire reports, although there is no report of casualty. The recalled FJ Cruisers were manufactured in the Oct 2012–Jan 2014 period.
Currently, Toyota carries a Zacks Rank #2 (Buy). Some other automobile stocks worth considering are Daimler AG (DDAIF), Tata Motors Ltd. (TTM) and Honda Motor Co., Ltd. (HMC). Daimler and Tata Motors carry a Zacks Rank #1 (Strong Buy) while Honda is a Zacks Rank #2 stock.
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