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Tickers in this Article: TM, FUJHY, HMC, NSANY
Toyota Motor Corp. (TM) announced that it would recall 185,000 units of some subcompact car models globally due to a problem with their electric power steering system. The glitch is making the steering heavier. However, no accidents were reported due to the problem.

The recalled vehicles include Yaris (know as Vitz in Japan) and Verso-S (aka Lactis in Japan) subcompact models. The recalled Yaris vehicles were manufactured between Nov 2010 to Mar 2012 while Vero-S vehicles are made between Aug 2010 and Aug 2011.


Toyota will recall nearly 130,000 vehicles in Japan, about 7,050 vehicles in Germany, about 7,000 vehicles in France and the rest elsewhere.

Toyota has been criticized continuously due to its series of vehicle safety recalls from the past few years. In Sep 2009, TM made the announcement of largest-ever global recall of 3.8 million vehicles triggered by a high-speed crash in California that killed 4 members of a family. Later on, a string of recalls has led Toyota to face numerous personal injury and wrongful death lawsuits in federal courts.

A few months ago, the U.S. Transportation Department slapped a fine of $17.35 million on Toyota due to a late response regarding a defect in its vehicles to safety regulators as well as late recall of those vehicles.

According to the department, it was the maximum allowable fine under the law for not initiating a recall in a timely manner. The fine added to $48.4 million imposed by the U.S. government on the company in 2010 due to late recall of millions of defective vehicles.

In April, Toyota along with other Japanese automakers, Honda Motor Co. (HMC), Nissan Motor Co. (NSANY) and Mazda Motor Corp. have decided to recall 3.4 million vehicles globally for an identical problem. All these automakers plan to recall vehicles for fixing defective airbag system in their vehicles, supplied by Japanese auto parts maker Takata Corp.

Toyota recalled 1.73 million vehicles globally. Among them, 580,000 vehicles were recalled in North America, 490,000 vehicles in Europe and 320,000 vehicles in Japan. Honda announced recall of 1.14 million vehicles worldwide while Nissan recalled about 480,000 vehicles and Mazda about 45,500 vehicles globally.

A few stocks that are worth considering in the automotive industry at present include Nissan Motor Co. and Fuji Heavy Industries Ltd. (FUJHY). Each of them carries a Zacks Rank #1 (Strong Buy).

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