Toyota Recalls Vehicles in Japan for Faulty Airbags - Analyst Blog

Toyota Motor Corporation TM is recalling 650,000 vehicles in Japan due to faulty airbags which can explode and thus injure the driver and passengers, according to media reports. This is in addition to the recall of 2.14 million vehicles in Apr 2013 to fix the same issue.

Toyota vehicles involved in this recall are mainly Corolla and Camry sedans, and Tundra trucks. The defective passenger-seat airbags, produced by Takata Corp, may not deploy properly in case of an accident.

Apart from Toyota, other automakers like Honda Motor Co., Ltd. HMC, Nissan Motor Co. Ltd. NSANY and BMW were also forced to recall vehicles last year due to faulty Takata airbags. All these automakers, who used the same inflators, recalled a total of 3.6 million vehicles in 2013.

Takata expects the potential number of vehicles recalled by other automakers to increase. Honda and Nissan are investing if any further recalls are required.

Previously, Toyota ordered its dealers to examine the airbags and replace only the defective airbags. Now the automaker has ordered the dealers in the U.S. and other overseas markets to replace the Takata inflators on all the vehicles which were recalled last year.

Toyota also said that there is one report, in which a defective airbag inflator burned the seat cover. The 2013 recall related to Takata is the largest ever recall related to airbags. There were reports of numerous accidents and two fatalities supposedly caused by malfunctioning airbags.

In addition, Takata acknowledged that due to inadequate quality-control records on their part, it was not possible to identify vehicles with potentially defective airbag inflators which were produced at factories in the U.S. and Mexico ten or more years ago.

Toyota currently holds a Zacks Rank #4 (Sell). Fox Factory Holding Corp FOXF, carrying a Zacks Rank #1 (Strong Buy), is a better-ranked stock worth considering in the same industry.