Tag Archive | "Honda Motor Co."

Recalled Cars Create A Costly Problem for U.S. Auto Dealers


Honda Motor Co’s order that its U.S. dealers stop selling some 2.2 million of the automakers’ most popular models is compounding financial and regulatory headaches for car dealers stuck with millions of vehicles that have potentially hazardous air bags or other safety defects, reports Reuters

With the recalls affecting Honda vehicles dating back several years, used-car dealers are facing increased pressure. It is legal under federal law to sell used cars with unrepaired safety defects that are subject to recall, but dealers that operate under franchises with manufacturers could be violating those agreements.

It is illegal to sell new cars that are subject to a recall under federal law.

Because some used-car dealers operate independently of any manufacturer, the growing number of used cars that need safety repairs is creating divisions among dealers. The National Highway Traffic Safety Administration says this difference creates a “safety loophole.”

John Isaacson, a Honda dealer in Auburn, Maine, said he was hit by three recalls the same day, but would respect Honda’s ban. “If people are selling these with open recalls, customers get mad,” Isaacson told Reuters. “Over time, it’s not good for business.”

Regulators have taken steps to address sales of used cars subject to safety recalls.

In a settlement last month with General Motors Co and two dealer groups, the Federal Trade Commission warned automakers and dealers not to claim that used vehicles sold as “certified pre-owned” cars had undergone comprehensive inspections if repairs required under a recall had not been done.

“Companies touting the comprehensiveness of their vehicle inspections need to be straight with consumers about safety-related recalls,” Jessica Rich, director of the FTC’s Bureau of Consumer Protection, said in a statement.

As in Honda’s case, manufacturers sometimes issue a “stop sale” on models subject to recall and can penalize their franchise dealers if they sell such cars.

The head of the California New Car Dealers Association, Brian Maas, said one of his members had 15 percent of his inventory affected by the Honda recall.

However, dealers outside the new vehicle franchise system, whether independents or chains such as CarMax, the largest U.S. used-car retailer, can sell such cars.

AutoNation Inc, the largest new vehicle dealer group in the United States, has said it will not sell a new or used vehicle that needed repairs under a recall, and Chief Executive Mike Jackson is calling on rivals to do likewise.

In the meantime, Jackson told Reuters, the policy is proving costly, in part because the chain has to stock more vehicles to make up for the roughly 16 percent of inventory it cannot sell.

AutoNation, with its huge network of dealerships, can “afford to do the right thing,” said Kelley Blue Book analyst Rebecca Lindland. Smaller dealers need to turn cars quickly and cannot afford dead inventory.

Honda has said parts to repair the Takata airbags will not be ready until late summer.

CarMax says it is transparent about recalls on its used cars, including a link on each car’s listing on the website to search for open recalls. Carmakers do not allow CarMax to perform recall repairs, so customers are “best positioned” to get repairs at franchised dealers after purchase, the company says.

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Exclusive: Takata, U.S. Regulator Can’t Say How Many Cars May Have Faulty Air Bags


DETROIT – At least 400,000 of the 4 million replacement inflators for defective Takata air bags will need to be replaced again in U.S. vehicles, sources at the Japanese safety equipment maker and the U.S. safety watchdog told Reuters.

Another 500,000 of those parts appear to be safe, according to U.S. safety regulators, leaving the safety of more than 3 million replacement parts in question.

But no one seems to be able to tell owners with any certainty just how many vehicles may still contain defective original or replacement parts.

Takata Corp in mid-May told the National Highway Traffic Safety Administration that nearly 34 million air bag inflators in the United States have the potential to rupture, sending spraying metal fragments inside vehicles. At least six deaths and hundreds of injuries are linked to ruptured inflators.

NHTSA previously had identified problems with about 17 million Takata inflators.

But it is not clear how many vehicles are equipped with defective inflators, although the number appears to be far fewer than 34 million.

An unspecified number of vehicles have Takata air bags on both driver and passenger sides – and in some cases, both may be defective. In other cases, repair parts installed in those vehicles also may be defective.

Since Takata’s May 18 disclosure, eight of 10 automakers that use Takata air bags have either expanded earlier recalls or initiated a new recall, and one other has said potentially defective parts are covered by previous recalls.

But the companies collectively have added only 3.3 million vehicles to the recall roster since May 18. Neither Takata nor NHTSA can explain the disparity.

The confusion extends to how many vehicles with replacement parts will need to go back to the dealer for more repairs. At least one automaker partly addressed the issue on Thursday.

In a recall expansion notice posted on Thursday by NHTSA, Honda Motor Co, one of Takata’s largest air bag customers, said an unspecified number of owners who had replacement parts installed since September 12, 2014, “received an inflator of a different design, and therefore are not included in this recall.”

Honda told Reuters that it has installed 1.2 million driver-side replacement air bags since Sept. 12. The kits were assembled by Takata, using inflators “of a different, contemporary design,” made by Takata and other suppliers, the carmaker said.

A NHTSA official told Reuters on Wednesday that it was up to Takata and the carmakers to “demonstrate to us that the remedy parts are safe for the life of the vehicle.” A priority now is to determine which of the replacement parts “are suspect and need to be replaced” again, the NHTSA official said.

Earlier in the week, when asked how consumers would know whether a replacement part would last for the life of the vehicle, NHTSA Administrator Mark Rosekind acknowledged that the issue was “confusing” and told lawmakers that owners should check with car dealers’ service departments.

Takata and its contract suppliers have been gradually ramping up shipments of replacement parts to automakers.

An estimated 400,000 of the replacement driver-side inflators use a potentially defective propellant wafer that is shaped like a batwing. “Those will have to be replaced again,” the Takata source said. That estimate was confirmed by the NHTSA source.

This year, about 500,000 replacement parts were made for Takata by outside suppliers, including TRW Automotive Inc and Autoliv Inc, according to the Takata source. The replacement parts from TRW and Autoliv use a different chemical from the Takata-made inflators.

“I don’t think we have any reason to suspect any problems with products from other suppliers,” the NHTSA source said.

By year end, Takata expects to provide at least 1 million inflators a month, of which about 700,000 will be made by TRW, Autoliv and others.

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Feds Fine Honda $70 Million for Safety Reporting Violations


DETROIT – The U.S. Department of Transportation’s National Highway Traffic Safety Administration announced Thursday Honda Motor Co. has agreed to pay $70 million for failing to report deaths, injuries and certain warranty claims to the federal government, reported MLive.

NHTSA said the Japanese automaker was in violation of the Transportation Recall Enhancement, Accountability and Documentation Act. Signed into law in 2000, the TREAD Act in part requires auto companies to report any defects, death or injuries related to their products.

The fine includes two separate, $35 million civil penalties. NHTSA said an investigation of the Japanese automaker found that it failed to submit early warning reports, which identify potential safety issues. The federal regulator said Honda did not report 1,729 death and injury claims between 2003 and 2013.

In addition to the fines, NHTSA is requiring Honda to develop written procedures for complying with requirements for early warning reports, as well as to train its relevant personnel on this front on an annual basis.

In 2014, NHTSA levied a record $126 million in civil penalties. It was more than the agency had collected over the course of its entire, 43-year history.

“Honda and all of the automakers have a safety responsibility they must live up to – no excuses,” U.S. Transportation Secretary Anthony Foxx said in a statement. “Last year alone, we issued more fines than in NHTSA’s entire history. These fines reflect the tough stance we will take against those who violate the law and fail to do their part in the mission to keep Americans safe on the road.”

NHTSA said its total fines in 2014 break down as follows:

  • Honda, $70,000,000, for failing to both submit early warning reports and warranty claims.
  • Gwinnett Place Nissan, $110,000, for failing to perform recall remedy in new motor vehicles prior to sale and delivery.
  • Ferrari S.p.A. and Ferrari North America, Inc, $3,500,000, for failing to submit early warning reports.
  • Chapman Chevrolet LLC, $50,000, for failing to perform recall remedy in new motor vehicles prior to sale and delivery.
  • Hyundai Motor America, $17,350,000, for the failure to issue a recall in a timely manner.
  • General Motors Company, $35,000,000, for the failure to issue a recall in a timely manner.
  • General Motors Company, $441,000, for failing to fully respond to Special Order by due date.
  • Prevost, a division of Volvo Group Canada, Inc; Volvo Industrial de Mexico S.A. de C.V.; and Prevost Car (US) Inc., $250,000, the second of six annual installments of a total of $1.5 million in civil penalties, for untimely recalls and untimely submission of early warning reports, and technical service bulletins (TSBs).
  • Southern Honda Powersports (a/k/a Big Red Powersports LLC), $25,000, the second of five annual installments of a total of $125, 000 in civil penalties, for the sale of unrepaired, recalled vehicles.

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Honda Discloses Full Greenhouse Gas Emissions Across All Operations


TORRENCE, Ca. – Honda Motor Co. Ltd. became the world’s first mobility company to disclose estimates of all greenhouse gas (GHG) emissions, including emissions from Honda’s global business operations and customer use of Honda motorcycles, automobiles and power products.

By calculating and disclosing global GHG emissions as a responsible company engaged in the area of mobility, Honda will continue making proactive progress with its global initiatives to reduce GHG and further extend the Honda LCA (Life Cycle Assessment) approach.

The estimates of GHG emissions were calculated in conformity with the GHG Protocol, which are currently the most widely used international accounting standards to measure GHG emissions. The GHG Protocol defines three scopes of emissions by categorizing different business activities. Honda has been disclosing all Scope 1 and Scope 2 emissions since 2009 and disclosed a part of Scope 3 emissions (global Category 11 emissions) for the first time on June 20, 2012. With this disclosure of all Scope 3 emissions, Honda has disclosed all GHG emissions defined by the GHG Protocol.

For the full disclosure, visit Honda’s Web site.

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Honda Electric Car Gets 118 MPG, But Costs Add Up


DETROIT — At 118 miles per gallon, the Honda Fit electric vehicle is the most fuel-efficient in the United States. But getting that mileage isn’t cheap — and it isn’t always good for the environment.

Honda announced the eye-popping figure this week, making the small, four-door hatchback more efficient than electric rivals like the Ford Focus, Nissan Leaf and Mitsubishi i-MiEV. It goes on the market this summer in Oregon and California, reported The Detroit News.

The electric Fit has an estimated price tag nearly twice as high as the gasoline-powered version. It would take 11 years before a driver makes up the difference and begins saving on fuel.

With gas prices falling, the high sticker price for electric vehicles is becoming more of a barrier for American buyers, even though the vehicles are far more efficient than their gas-powered counterparts. That’s hurting sales of electrics.

Through May, carmakers sold just over 10,000 electric vehicles, less than 0.2 percent of U.S. car and truck sales.

That’s because the numbers don’t add up for the average consumer.

The electric Fit needs 28.6 kilowatt hours of electricity to go 100 miles. At the national average price of 11.6 cents per kilowatt hour, that costs $3.31.

A gas-powered automatic-transmission Fit, which gets 31 miles per gallon, needs to burn 3.2 gallons to travel 100 miles. At the national average price of $3.57 per gallon of gasoline, that’s $11.42.

People drive an average of almost 13,500 miles a year, so a typical driver would spend $446 on electricity for an electric Fit over a year, and $1,542 on gasoline for a regular Fit.

Honda has valued the price of an electric Fit at $29,125 after a $7,500 federal tax credit. That’s $12,210 more than the gas-powered Fit — a savings of $1,110 per year to make up the difference between the electric and the gas-powered version.

Customers don’t want to spend the extra money up front and wait for years for payback, said Geoff Pohanka, who runs 13 auto dealerships in Virginia and Maryland, including three that sell the Nissan Leaf and Chevrolet Volt electric cars.

“People are smart. They’re looking for the deal,” he said. “Is somebody going to fork out $15,000 more for something that gets them less range than their car now? It’s not happening.”

At first, Honda will only be leasing Fit EVs in Oregon and California, for $389 per month. The subcompact seats up to five people and can be recharged in three hours with a 240-volt charging station. A fully charged Fit EV can go 82 miles, meaning a daily commute could cost nothing for gasoline.

And leases can make sense for consumers. Carmakers can lower rates and subsidize deals in order to make a car — especially one with new, expensive technology — more attractive to buyers.

Jesse Toprak, vice president of market intelligence for the car-buying site TrueCar.com, said he tested an electric Chevrolet Volt, driving it less than 35 miles a day from his Los Angeles-area home to work and back. The cost of leasing it — $369 a month — is comparable to the $300 he would spend on gas.

“In a lot of these cases, I’m surprised that people are not lining up to get these things,” he said.

The comparison between gas and electric cars also can vary with geography, largely because energy prices vary widely across the country.

In Oregon, where gasoline is 18 percent more expensive than the national average and electricity is 16 percent lower, an electric Fit will save $121 per month in fuel. In Connecticut, which has the highest power prices in the country, the monthly savings are just $83.

The fuel used to generate electric power and the cost of gasoline also vary by region —and that affects how environmentally friendly an electric car purchase is.

In Midwestern states that rely heavily on coal, driving an electric car produces 18 percent fewer greenhouse gas emissions than driving a typical gasoline-powered car, according to the Union of Concerned Scientists. Surprisingly, driving an electric car there produces 50 percent more greenhouse gases than driving a 50 mpg electric hybrid.

In the Northeast and Northwest, where a bigger portion of the power is produced with nuclear reactors, hydroelectric dams, natural gas-fired power plants and wind farms, an electric car will produce 76 percent fewer greenhouse gas emissions than a typical gasoline-powered car and 56 percent fewer emissions than a hybrid.

No matter what the energy costs, Honda expects to trumpet the Fit EV’s 118 mpg figure, even though it will lease only 1,100 of the cars in its first two years on the market.

Honda predicts that the initial customers for the Fit EV won’t be focusing on a cost-benefit analysis. Instead, they’ll want to make a statement about cutting greenhouse gases and reducing dependence on foreign oil, said Robert Langford, Honda’s manager of plug-in electric vehicle sales.

Like the rest of the auto industry, Honda isn’t sure when or if electric vehicles will ever replace those that run on gas, he said. The company keeps constant watch on sales of electric cars already on the market, such as the Nissan Leaf and Chevrolet Volt.

“That’s constantly on our mind right now and on our radar screen,” said Langford.

Chevrolet doesn’t actively market the Volt’s 94 mpg figure, because it’s too confusing to explain to consumers that the car can drive that distance while running on electricity. The Volt, unlike other electrics, has a small gas engine on board to generate power for the car after the battery is depleted.

What resonates more with consumers is that the average Volt driver goes 900 miles before buying gasoline, said Cristi Landry, the car’s marketing director.

She also isn’t sure when electric cars will go beyond the environmentally conscious buyer and into the rest of America’s driveways.

Electric vehicles, Toprak said, won’t sell en masse until customers know they will ultimately save enough to take a risk on new technology.

“You’re not buying it to save the trees,” Toprak said. “You’re buying it to save money for yourself.”

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Honda’s Ito Forecasts Business Results to Be Best in at Least Five Years


Honda Motor Co. President Takanobu Ito forecast that business results at Japan’s third-biggest carmaker will climb to the highest in at least five years, led by sales of Accord sedans and Civic compacts in North America.

Business results in the year ending March 2013 will recover to levels achieved before the failure of Lehman Brothers Holdings Inc. roiled global markets, as sales climb above 4 million vehicles for the first time, Ito said in an interview this week. Lehman filed for bankruptcy in September 2008, six months after Honda earned record annual profits, according to Bloomberg.

“It will be the year of the complete rebound,” Ito said at the company’s Tokyo headquarters. “Sales in North America will lead the recovery. We’ll introduce a fully revamped Accord in the fall, and that will be a big plus to our sales.”

Ito’s comments reflect a revival in confidence by Japanese automakers as they recover from a year plagued by natural disasters at home and in Thailand. Toyota Motor Corp., Asia’s largest carmaker, said this week annual sales will be 100,000 units higher than it anticipated last month.

“Honda’s targets are definitely aggressive, but the U.S. economy seems like it’s going to recover to a better-than- expected level this year so it’s likely for them to achieve it,” said Mitsushige Akino, who oversees $600 million at Ichiyoshi Investment Management Co. in Tokyo. “They’ve remodeled their best-selling cars, and we can expect strong sales in North America to help them regain market share.”

Honda fell 1.9 percent to close at 2,689 yen in Tokyo. It’s gained 15 percent this year, the best performer among Japan’s three biggest automakers. That’s a reversal from 2011, when the stock’s 27 percent drop made it the worst performer.

Honda’s operating income, or sales minus the cost of goods sold and administrative expenses, will probably double to 586.6 billion yen ($7.6 billion) next fiscal year after shrinking 52 percent, according to the average of 24 analyst estimates compiled by Bloomberg. Earnings reached 953.1 billion yen, 851.9 billion yen and 868.9 billion yen, respectively, in the years before Lehman’s bankruptcy.

Ito, 58, is counting on the U.S. market to drive growth.

The redesigned Accord sedan, the Civic and CR-V sport- utility vehicle will help Honda increase U.S. sales 24 percent to 1.43 million units in 2012, Ito said. Sales in the market, Honda’s largest, declined 6.8 percent last year, led by a 17 percent drop in deliveries of the Accord. The Accord is Honda’s best-selling U.S. model, followed by the Civic.

Ito ruled out any major overhaul of the Civic after the current version of the sedan, which failed to receive the “recommended” status its predecessors had from Consumer Reports magazine, was the best-selling model in the compact-car segment in the last three months of the year.

Honda’s new models will give it an edge in the U.S. over South Korea’s Hyundai Motor Co., which is producing close to full-capacity, said Kota Yuzawa, a Tokyo-based analyst at Goldman Sachs Group Inc. That puts Honda in “good position” to regain lost market share, he said.

Honda may not be alone. Japan’s three biggest carmakers are poised to gain market share this year at the expense of U.S. producers led by General Motors Co. and Ford Motor Co., according to five analysts surveyed by Bloomberg.

In China, the world’s largest auto market, Honda expects its sales to rise more than 20 percent to 750,000 units in 2012 after they shrank for the first time in 2011 in a slowing market, Ito said. The company plans to introduce three gas- electric hybrid models in the country this year, he said.

“China is still strong,” Ito said. “Once motorization captures a market, it’s unstoppable.”

China’s total vehicle sales — including cars, trucks and buses — grew 2.5 percent to 18.5 million units last year, according to the China Association of Automobile Manufacturers, trailing growth in the U.S. for the first time in at least 14 years. Honda expects the market to expand to 20 million this year, or “just above” China’s economic growth, he said.

In Thailand, where the country’s worst floods in almost 70 years disrupted assembly plants and supply of components in 2011, Honda plans to resume production starting in April, Ito said. Damages stemming from Thailand forced the company to scrap this fiscal year’s profit forecast.

As part of Honda’s strategy of producing cars where they are sold, the company plans to reorganize its Japanese factories so they focus on production of minicars, a growing category that makes up about 40 percent of the nation’s auto demand, Ito said. Orders for the N Box minicar in Japan reached 27,000 units in its first month of sales, more than double Honda’s original target.

Minicars, defined as vehicles no longer than 3.4 meters (11 feet) in length, will account for 40 percent of Honda’s Japan sales, compared with 25 percent now, Ito said.

Honda joins Toyota and Nissan in reorganizing operations as the yen, which has gained against the world’s 16 most-traded currencies for two straight years, erodes the value of exports. Honda plans to boost the portion of vehicles sold in the same region they’re built to as high as 80 percent, Ito said. In 2010, Honda sold about two out of three Japan-built cars in the country.

Officials at Toyota and Nissan this month have also echoed plans to increase their portion of vehicles sold in the region where they’re assembled.

“Minicars will be key for us in Japan in the next five years,” Ito said.

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