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Honda (HMC) Expands Takata Air Bag Recall by 772K Units


Tokyo-based Honda Motor Co. HMC is recalling 772,000 additional vehicles in the U.S. for defective front passenger seat air bag inflators made by Japanese supplier Takata Corp. The vehicles are part of an expanded recall of 1.29 million vehicles. Massive recalls are being announced by all automakers for defective Takata inflators that can explode in a crash, sending metal shrapnel into the passenger compartments causing fatal injury.

The recall covers models including the 2005-2006 Acura MDX, 2005-2012 Acura RL, 2008-2012 Honda Accord, 2006-2011 Honda Civic, 2007-2012 Honda Fit, 2010-2012 Honda Insight, 2009-2012 Acura TSX, 2011-2012 Acura TSX Wagon, 2010-2012 Acura ZDX, 2010-2012 Honda Crosstour, 2005-2011 Honda CR-V, 2005-2011 Honda Element, 2012 Honda FCX Clarity, 2005-2012 Honda Pilot and 2006-2012 Honda Ridgeline.

Ammonium nitrate is used to inflate the Takata air bags during a crash via minor explosions. As a result of the defect in these air bags, 16 people have been killed and about 180 have been injured worldwide. Almost 100 million vehicles made by 17 automakers have been recalled globally, which emphasizes the extent of the crisis. Due to such massive recalls, the replacements are going to take several years.

Honda Motor Company, Ltd. Price and Consensus

Honda’s shares have underperformed the Zacks categorized Foreign Auto Manufacturers industry over the last three months. While the company’s shares gained 3.2% over this period, the industry recorded a gain of 4.8%. The company has been recalling vehicles frequently over the last few years. Apart from this, a weak financial position and declining sales volume in its domestic market, Japan, is hindering the company’s growth.

Nevertheless, Honda is focusing on product introductions and expanding its business in Asia to attract more customers. Frequent collaborations are being undertaken to expand its business. The company has several car launches scheduled including an impressive lineup of motorcycles scheduled for 2016 and 2017. Moreover, it is also expected to benefit from the planned launch of fuel cell vehicles.

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

Key Picks

Some better-ranked companies in the Automotive Foreign industry include Fuji Heavy Industries FUJHY sporting a Zacks Rank #1 (Strong Buy), and CNH Industrial CNHI and Daimler DDAIF carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Fuji Heavy Industries’ fiscal 2017 and 2018 earnings per share (EPS) estimates have increased over the past seven days.

CNH Industrial Industries’ 2016 and 2017 EPS estimates have increased over the past seven days.

Daimler recorded a positive earnings surprise of 52.2% over the last four quarters.

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