Nissan Motor Co. (NSANY) revealed that it would recall 51,000 units of Qashqai sports utility vehicles (SUVs) and NV200 vans in Europe, Asia, Latin America, the Middle East and Australasia in order to address a problem with their steering wheels.
The Japanese automaker prompted to recall the vehicles voluntarily after receiving complaint from a new Qashqai owner in Finland, where the steering of the vehicle became detached while driving.
The company stated that the steering wheel of the vehicles could loose only "in extreme circumstances". Fixing the defect would mean replacing parts in some 600 recalled vehicles, which include Qashqai, Qashqai+2 and Nissan NV200 models.
Last year, Nissan recalled many of its models that include Infiniti, Frontier, Xterra, Pathfinder, Sentra and Juke. Among them, the largest recall included 34,000 units of Sentra compact cars due to a problem with their battery cables that caused the engines to stall.
Automotive safety recalls were brought into focus by media after Toyota Motors' (TM) announcement of the largest-ever global recall of 3.8 million vehicles in September 2009, triggered by a high-speed crash that killed 4 members of a family.
Later on, a string of recalls had led Toyota to face numerous personal injury and wrongful death lawsuits in federal courts. The Transportation Department of U.S. had also imposed a fine of $48.4 million on the company due to late recall of millions of defective vehicles.
Nissan, a Zacks #3 Rank (Hold) stock, witnessed a 15% fall in profits to ¥72.3 billion ($903.5 million) or ¥17.24 (21 cents) per share in the first quarter of fiscal 2012 ended June 30, 2012, from ¥85.0 billion or ¥20.32 in the corresponding quarter last year. Reported profit also missed the Zacks Consensus Estimate of 51 cents per share.
Revenues in the quarter grew 2.6% to ¥2.14 trillion ($26.64 billion). Unit sales increased 14.6% to 1.21 million vehicles globally. Net sales grew 12.4% to ¥1.1 trillion ($13.80 billion) in Japan, 7.2% to ¥754.9 billion ($9.4 billion) in North America and 6.1% to ¥518.8 billion ($6.5 billion) in Asia. However, revenues in Europe declined 12.8% to ¥371.5 billion ($4.6 billion) during the quarter.
Operating profit in the quarter fell 20% to ¥120.7 billion ($1.5 billion) from ¥150.4 billion in the year-ago quarter. The decrease in operating income was due to unfavorable foreign currency translation, high selling costs in North America due to product renewal cycle and unfavorable pricing.
Nissan expects to launch new products and renew major lineups across its namesake, Infiniti and Venucia brands. The company expects total sales to increase 9.5% to ¥10.3 trillion ($128.8 billion) in fiscal 2012.
Operating income is projected to surge 28.2% to ¥700 billion ($8.75 billion) in fiscal 2012. Profits expect to go up 17.2% to ¥400 billion ($5 billion) or ¥95.44 ($1.19) per share for the year.