Toyota Motor Corporation (TM) is recalling 516,000 vehicles worldwide, according to media reports. Of these, 430,500 cars were recalled in the U.S. The automaker recalled the vehicles due to three different safety issues.
The largest recall is of 450,000 Sienna minivans of model years 2004–2011, particularly those sold in cold areas. Toyota recalled the minivans as road salt corroded the spare tire carrier under the vehicle leading to the fall of the tire. The automaker had recalled the vehicles for the same reason in 2010 and installed a splash protector and anti-rust protection but it was of no help. Of the total Sienna minivans recalled, 370,000 minivans were sold in the U.S., 80,000 in Canada and 400 in Europe.
Next, Toyota recalled 16,000 Lexus GS 250 and 350 sedans of model year 2013 due to a manufacturing defect in the brakes. Due to the defect, the brakes get activated without warning, and without turning the brake lights on. Of the vehicles recalled, 10,500 were sold in the U.S. The recall also includes the left-hand-drive sedans which were sold in Canada, China and Europe.
Finally, Toyota recalled 50,000 Highlander and Highlander hybrid SUVs of model year 2014. The automaker recalled the vehicles due to a software glitch which might cause problem in calculating the size of the front passenger in case of deploying the air bags. Of the recalled vehicles, 45,287 were sold in the U.S., 3,400 in Canada and the rest in Mexico and Europe.
Toyota mentioned that there is no report of any causality due these defects and that the dealer will repair the defects free of cost.
Product recalls have adverse impact on the brand image. In April, Toyota announced its second largest recall of 6.36 million vehicles globally. 27 Toyota models were recalled for 5 different issues and some of the cars were recalled for multiple issues. If we double-count such vehicles, the total number of recall increased to 6.76 million.
Toyota’s rival, General Motors Co. (GM), is also in a difficult situation with a slew of recalls. The latest is a recall of 284,913 Chevrolet Aveo and Optra vehicles of model years 2004 to 2008 in the U.S. and other markets. Of these, 218,000 Chevrolet Aveo cars were recalled in the U.S. The automaker recalled the vehicles due to fire hazard.
Toyota currently holds a Zacks Rank #4 (Sell). Tata Motors Ltd. (TTM) and Fuji Heavy Industries Ltd. (FUJHY) are some better-ranked automobile stocks worth considering. Tata Motors carries a Zacks Rank #1 (Strong Buy) while Fuji is a Zacks Rank #2 (Buy) stock.
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