Poor Toyota (TM). When word of the Toyota recall first broke in February, nobody ever expected things to get this crazy. We saw a record $16.4 million fine last week, followed by rumors of cut to the Toyota dividend. But all that hullabaloo managed to obscure the fact that TM wasn’t the only company having trouble with its brakes. In March, Honda (HMC) enacted a big recall of its own.
Specifically, a recall was issued March 16 for about 344,000 Odyssey and 68,000 Element vehicles from the 2007-2008 model years. According to reports, brake problems caused a number of crashes. The HMC recall comes about a month after the company was forced to expand an airbag recall that now encompasses more than 826,000 2001 and 2002 model year Honda vehicles.
To its credit, Honda took no chances with the recall. “Although not all vehicles being recalled are affected by this issue, we are recalling all possible units to assure all customers that their vehicles will perform correctly,” HMC said in a press release.
Honda has kept a low profile so far with this recall, but after all the bad press for TM stock, this may not last. Toyota has offered big incentives to new buyers in recent weeks to win back consumers. It looks like the move worked, because Toyota sales climbed nicely in March as a result – more than doubling auto industry laggard Chrysler.
When the heat dies down, HMC stock may start to get a bit of negative press. Recalls over faulty power windows are one thing, but brakes and airbags are one thing that consumers don’t like to hear may fail.
Market share is shaping up to be everything for auto stocks this year, as consumer spending continues to hold back vehicle sales from their historic levels despite improvement over lackluster 2009 numbers. Honda is going to need to work very hard at limiting the damage control from its own recalls to avoid the bad press that Toyota has endured.
Related Articles:
- Is Toyota the New Yugo? (TM, F, HMC)
- Toyota Dividend Cut Rumors Baffle Wall Street
- 5 Reasons Chrysler Could Be Doomed
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