Honda Faces U.S. Probe Over Engine Faults in 1.4M Vehicles
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Honda Faces U.S. Probe Over Engine Faults in 1.4M Vehicles

Story Highlights

Japanese car manufacturer Honda Motor is facing an investigation in the U.S. for faulty engine issues in 1.4 million vehicles.

Japan-based Honda Motor Co. (JP:7267) is facing an investigation by the U.S. government over potential engine faults impacting 1.4 million vehicles. The NHTSA (National Highway Traffic Safety Administration), the U.S. government’s highway safety agency, opened the probe following multiple engine complaints about an older issue. Honda shares have gained 0.29% as of writing in Hong Kong.

Honda Motor is a Japanese conglomerate that manufactures automobiles globally.

NHTSA Investigates Honda as Engine Complaints Resurface

The NHTSA has initiated the probe after receiving 173 complaints from owners reporting engine problems in their vehicles. A year ago, Honda recalled approximately 250,000 vehicles to tackle the same problem.

The new complaints include the potential failure of connecting rod bearings in the Honda and Acura vehicles, none of which were part of the initial recall. Acura is Honda’s luxury division, primarily focused on the North American market. With this probe, NHTSA seeks to evaluate the issue to decide if vehicles excluded from the 2023 recall should be covered.

Meanwhile, Honda has stated that it will fully cooperate with NHTSA in the investigation.

Honda Reports Lower Q2 Profits Amid Weak Sales

Last week, Honda Motor reported a 15% decline in its Q2 operating profits to ¥257.9 billion, primarily due to a sharp drop in sales in China. The company is facing competitive pressures in China, resulting in lower sales.

Honda earlier reported a fall of 1.5% in its global vehicle sales to 2.8 million units for the first nine months of 2024. The decline was attributed to a 29% drop in China, offsetting stronger sales in the U.S. and Japan.

Despite this, the company kept its full-year operating profit forecast unchanged at ¥1.42 trillion.

Is Honda Motor a Good Buy?

According to TipRanks, 7267 stock has been assigned a Strong Buy rating, backed by four Buy recommendations. The Honda Motor share price target is ¥1,987.32, which is 44% above the current trading price.

See more 7267 analyst ratings.

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