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TwitterHot on the heels of the disappointing news from Toyota (TM) to recall 4.6 million cars worldwide, comes a similar news from the Honda Motor Co. (HMC), who are recalling 646,000 cars over safety concerns. The recall includes all Fit, City and Jazz models made in 2007 and 2008. The Toyota fiasco already has the car’s owners fuming and now they will be joined in the ranks by Honda owners. The news comes as a double blow for the Japanese automotive market.
The Tokyo, Japan based company, which is also the sixth largest automobile maker in the world declared on Friday that it was recalling the compact cars with a possible fire hazard. In a statement, the company said that a defective master switch could cause water to enter the power window switch and could, in some cases, cause a fire. Three cases of fire have been reported so far, including a fatal one in South Africa, which killed two year old Vanilla Nurse. The other two reports came from the US.
The recalled cars were manufactured in China, Brazil, Thailand, Malaysia, Japan and India. A total of 140,000 cars will be recalled in the US. About 171,000 in UK and about 27,000 City models in Asia.
Investors expressed their disappointment with the company and the shares dropped 1.62% to close at the lowest level of the day at $33.91. The company’s shares have risen over 51% in the past year and hit a high of $37.23 on January 15, but have been going southwards ever since, losing nearly 9% still end of trade today.
The year 2010, has not started as well for the Japanese automotive giants. Toyota has recalled nearly 8 million vehicles in the US alone in the past 4 months. And the troubles for Toyota Motor Corp. got worse today as Congressional investigators kicked off their probe of the faulty vehicles, which sparked this week’s recall of 4.6 million vehicles. President Akio Toyoda apologized for a widening recall crisis as the company prepares to explain plans to fix the accelerator pedal flaw.
Toyota’s shares also took more pounding and closed at $77.00, a drop of 0.86 % over yesterday and a weekly drop of 15.51 %. Reports have said that Toyota’s faulty vehicles could have been a cause of approximately 19 deaths over the past decade.
Honda Headqaurters in Tokyo, Japan
The Japanese companies which were known for their unmatched quality suddenly find themselves in a tight spot. There also concerns that the companies might not just dent their own image in the world market but also that of the country. Various agencies have also lashed out at the vehicle safety departments in the US and UK saying that they have been too complacent in keeping a check on safety issues in vehicles. And, after Toyota, Honda has not helped their case.
After a particularly bad year for US car manufacturers, the troubles seem to have shifted to across the ocean, and these troubles are not just restricted to the financial side of the game. With Ford declaring whopping profits of $2.7 billion for 2009, it will feel like someone is rubbing salt of the Japanese car manufacturer’s wounds.
Will these incidents happening so close to each other. Everyone’s attention has not just being drawn to it, but every single point has been magnified many fold. Something the companies will not be too happy about. So, will this mean that the once infallible car makers have to give up their tags of reliability and unparalleled worksmanship ?
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