Toyota (TM) to Recall 460K Vehicles Over Software Glitch

Toyota Motor TM recently announced its decision to recall around 460,000 vehicles in the United States to fix a software malfunction that may disable the electronic stability control system. It reported that the software glitch might not let the vehicle stability control system automatically turn on the next time the car is started, which is a case of non-compliance with U.S. regulations.

The recall covers vehicles from 2020 to 2022 model years, including the Toyota’s Venza, Mirai, RAV4 Hybrid, RAV4 Prime, Sienna Hybrid, Highlander Hybrid, and the LS500h, LX600, NX350h, and NX450h-plus from the Lexus luxury brand.

Dealers will update the software on the skid control computer to fix the problem. Owners will be notified by mid-June.

Toyota and Lexus dealers will update the skid control computer software free of charge to customers and owners will be notified by the middle of June.

Many auto companies have been announcing recalls of some of their models on issues related to damaged parts or certain features that compromise the safety of other drivers on the roads. Recently auto giants Ford Motors F and General Motors GM announced recalls in the event of defective body parts.

Ford has issued two recalls covering more than 737,000 vehicles to fix oil leaks and malfunctioning trailer braking systems. These cover Ford Escape SUV from 2020 through 2022 and the 2021 and 2022 Bronco Sport SUV, as well as the F-150 pickups from 2021 and 2022 and the 2022 F-250, 350, 450 and 550.

General Motors has issued a recall of more than 680,000 SUVs due to a snag in their windshield wipers resulting from wear and tear in the ball joints. The recall consists of 2014 to 2015 Chevrolet Equinox and GMC Terrain vehicles.

Recalls are a pain point for automakers as they weigh down on the companies’ costs and time.

Shares of TM have risen 7.1% over the past year against its industry’s 10.4% decline.

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Zacks Rank & A Key Pick

TM currently has a Zacks Rank #4 (Sell).

A better-ranked player in the auto space is Tesla, Inc. TSLA, sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Tesla has an expected earnings growth rate of 45% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised around 6.3% upward in the past 60 days.

Tesla’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters. TSLA pulled off a trailing four-quarter earnings surprise of 33.3%, on average. The stock has risen 38.4% over the past year.

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