Normally, news of a massive mechanical flaw in a line of cars that means a recall of millions of them would be a serious problem. But investors must be pleased with how Honda Motor Company (NYSE:HMC) is handling it because Honda was briefly, fractionally up in Thursday afternoon’s trading after its own recall effort emerged.
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Honda’s recall effort focused on a very serious issue: its fuel pump. Reports note that over 2.5 million Hondas are impacted by this recall, and those may find their engines won’t start, or if they do, could stall at any point while driving. The issue traces back to an impeller in the fuel pump, which was “improperly molded,” and thus, more subject to deformation over time. While no crashes have been reported so far, nor have any injuries arisen, Honda is taking steps to fix the matter right away. Owners of models with the faulty fuel pump will receive notice in stages, starting in February 2024.
That’s Not the Only Problem
That’s bad news in and of itself, but it’s only the latest in a string of problems for Honda. In fact, just yesterday, word emerged about another planned recall of the CR-V hybrid over a matter of a missing fuse. The missing fuse can lead to a short circuit in the battery, which can mean an increased risk of fire or other injury if a crash takes place. That impacts around 106,000 vehicles and was the third in a series of recalls that took place beforehand, reports noted.
Granted, there are other recalls taking place right now—Ford (NYSE:F) leads the way so far with 54 recalls this year—but recalls have the double-edged effect of making a business look both responsible and suspect at the same time. They’re fixing their mistakes, but those mistakes might kill people, and people aren’t interested in buying a product that might kill them. At least, not immediately.
Is Honda Motors a Good Stock to Buy?
Turning to Wall Street, a look at the last five days in trading for Honda Motor Company stock shows that shares are up overall, though not as up as they were previously. There were actually two sudden sharp increases in HMC’s share price before the latest events pulled it off its high point for the period. It’s worth noting, though, that it’s still above the low point of the last five days by a healthy margin.
