Toyota Recalls 3.2M Vehicles Worldwide Over Faulty Fuel Pumps

Toyota Motor Corporation (NYSE:TM) recently recalled 1.2 million vehicles, including trucks, SUVs, minivans and cars across the model line-ups of its namesake and Lexus brands in the United States, in order to fix fuel-pump issues. These vehicles have fuel pumps that can stop operating, causing the cars to stall, in turn, escalating the risk of a crash.

This January, the company recalled 700k vehicles in the United States over the same issue. Per the company, about 118,000 vehicles in the January recall shouldn’t have been included. However, the recall now covers 1.8 million in the United States and 3.2 million vehicles worldwide.

The recalled Toyota vehicles now included are certain models from 2018 and 2019, including Camry, Highlander, Sequoia, Tacoma and Tundra vehicles, along with 2019 Avalon and Corolla sedans. The recalled Lexus vehicles include certain 2018 and 2019 models, namely ES 350, GS 350, IS 300, IS 350, LC 500, LC 500h, LS 500, LS 500h, RC 300, RC 350, RX 350L.

The new vehicles recalled are in addition to the 2013-2015 Lexus LS 460, the 2013-2014 Lexus GS 350, the 2014 Toyota FJ Cruiser and Lexus IS-F, the 2014-2015 Toyota 4Runner and Land Cruiser and Lexus GX 460, IS 350 and LX 570. Other vehicles include the 2015 Lexus NX 200t and RC 350, the 2017 Lexus IS 200t and RC 200t, the 2017-2019 Toyota Sienna and Lexus RX 350, and the 2018 Lexus GS 300.

The company will replace the faulty fuel pump with an improved one, and aims to contact the affected vehicle owners by May 2020.

Shares of Toyota have outperformed the industry it belongs to. Its shares have appreciated 11.8%, as against the industry’s decline of 1%.

For the past few years, Toyota has been recalling vehicles in large numbers for various safety concerns. Frequent recalls not only affect the company’s reputation but also result in significant expenses and lower the vehicle-resale value. In the last few years, Toyota has paid huge fines due to safety defects in some vehicles, as well as to settle lawsuits.

Toyota’s forecast of consolidated vehicle sales of 8.95 million units remains unchanged for fiscal 2020. The company projects consolidated net revenues, operating income and net income to be ¥29.5 trillion, ¥2.5 trillion and ¥2.35 trillion, respectively.

Zacks Rank & Stocks to Consider

Toyota currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Auto-Tires-Trucks sector include LCI Industries (NYSE:LCII) , SPX Corporation (NYSE:SPXC) and Adient PLC (NYSE:ADNT) . While LCI sports a Zacks Rank #1 (Strong Buy), SPX and Adient carry a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

LCI has an estimated earnings growth rate of 20.72% for the ongoing year. The company’s shares have gained 28.7% in a year’s time.

SPX has an expected earnings growth rate of 6.52% for 2020. The stock has rallied 241% in the past year.

Adient has a projected earnings growth rate of 17.79% for the current year. The company’s shares have appreciated 31.5% over the past year.

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