Toyota Motor Corp. (TM) announced that it will recall 33,809 units of Corolla sedans in order to fix a problem with its engines. The sedans were manufactured between October 23, 2010 and January 29, 2011 in the company’s Tianjin plant in China.
The plant is operated by the joint venture between China’s FAW Group Corporation and Toyota. Tianjin FAW Toyota Motor Co Ltd is an equally owned joint venture with Toyota, formed in 2003, manufacturing passenger vehicles in Tianjin.
Apart from Toyota, FAW also has joint ventures with foreign automakers, including General Motors Company (GM) and Volkswagen (VLKAY).
The past string of recalls has tarnished Toyota’s reputation, resulting in declining sales and lower vehicle resale value. Since November 2009, Toyota has recalled more than 14 million vehicles globally in about 20 recalls, surpassing all other automakers. The Transportation Department of U.S. also imposed a fine of $48.4 million due to late recall of millions of defective vehicles.
At the end of June, the automaker has recalled 82,200 units of its sports utility vehicle hybrids due to a glitch in their computer boards. The recall involved 45,500 units of Highlander and 36,700 units of Lexus Rx 400h, 2006 and 2007 models that are sold only in the U.S.
The Zacks #1 Rank (Strong Buy) posted a profit of ¥1.16 billion ($14.21 million) or 37 yen cents per share for the first quarter of its fiscal year ended March 31, 2012, which plummeted from ¥190.47 billion ($2.33 billion) or ¥60.74 per share a year ago.
The sharp fall in profit was attributable to substantial decline in vehicle sales all over the world, especially North America and Europe due to disruptions in supply of parts caused by the earthquake and tsunami in Japan on March 11.
In Asia, the company has managed to maintain a similar level of vehicle sales compared with the previous year led by strong sales in Indonesia. Moreover, currency fluctuations had a negative impact on the company’s profit.
Revenues in the quarter dipped 29.4% to ¥3.44 trillion ($42.15 billion), driven by a 33% fall in global vehicle sales to 1.22 million units. Vehicle sales slashed 41.5% to 292,283 units in Japan, 47.6% to 275,468 units in North America, 6.8% to 174,249 units in Europe, 9% to 259,873 units in Asia, and 31.8% to 219,501 units in Other regions.
The automaker had an operating loss of ¥108.0 billion in contrast to an operating profit of ¥211.66 billion in the first quarter of previous fiscal year. Operating profit was negatively affected by marketing activities of ¥280.0 billion and currency fluctuations of ¥50.0 billion.
GENERAL MOTORS (GM): Free Stock Analysis Report
TOYOTA MOTOR CP (TM): Free Stock Analysis Report
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment