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Takata Air Bag Recall Expands to Record 34 Million Vehicles


As part of an agreement with Takata, federal regulators expanded the recall of vehicles equipped with the company’s air bags to 33.8 million in the U.S., making it the largest safety recall in the nation’s history, reports Detroit Free Press.

The move essentially doubles the number of vehicles being recalled to replace potentially lethal air bags made by the Japanese supplier. At least six people have died and more than 100 have been injured from shards of metal from exploding air bags.

Takata, for its part, officially acknowledged the defects for the first time on Tuesday, even though 17 million vehicles with its air bags already have been recalled.

Mark Rosekind, recently appointed administrator of the National Highway Traffic Safety Administration, said no one knows how long it could take to fix the vehicles, but “it could take some years. … We intend to make sure at the end of this process there is a safe airbag in every vehicle.”

The NHTSA recall now involves 11 automakers, including the Detroit Three, most affecting 2002 through 2008 model years. Takata is partly owned by Honda, which has the highest percentage of recalled vehicles. The total number could change as automakers sift through the specs of all of their models to determine which ones contain any of the four defective inflators, which activate the air bags in a collision.

Many consumers will have to drive their vehicles for a long time before the parts are available to fix them, with the industry unable to manufacture replacement bags fast enough. They could also be waiting months for the notification their vehicle is subject to recall because automakers must prioritize vehicles at most risk based on their age and geographic location

The announcement is the second example in as many days of Rosekind cracking down on automakers to address safety on U.S. roads. On Monday, Rosekind announced he has scheduled a hearing in July for Fiat Chrysler Automobiles to explain their slow response in completing repairs in 20 different recalls.

NHTSA has been pushing for Takata to expand its air bag recall. Automakers had recalled about 17 million vehicles, many of them from Honda. The latest move largely makes this a national recall of vehicles from 11 automakers with vehicles that potentially have faulty inflators in the driver or passenger-side air bag.

“Up until now Takata has refused to acknowledge that their airbags are defective, that changes today,” said U.S. Treasury Secretary Anthony Foxx. “Takata has agreed to declare their air bag inflators are defective.”

Takata Chairman Shigehisa Takada, in a statement, said, “We are pleased to have reached this agreement with NHTSA, which presents a clear path forward to advancing safety and restoring the trust of automakers and the driving public.”

The supplier has also agreed to enter into a consent order with NHTSA to supply all related documents and information about the defective airbags and pledged full cooperation going forward.

In return, NHTSA has suspended more than $1 million in accumulated fines — $14,000 per day since February — for not responding to all NHTSA’s inquiries. The agency has not ruled out more fines in the future and there could be further civil penalties.

Initially the exploding air bags were considered a problem only in hot and humid climates but the recall has been expanded nationally as Takata and affected automakers continue to try to identify the root cause of the problem so they can fix it.

The recall has also expanded to cover both driver and passenger side air bags in more vehicles and regions.

Automakers with affected vehicles include Honda, Toyota, Ford, BMW, Fiat Chrysler Automobiles, General Motors, Mazda, Mitsubishi, Nissan, Subaru and the newly added Daimler Trucks. The automakers formed a coalition and hired independent engineering firm Orbital ATK to try to find the cause of the exploding air bags. Their investigation is in addition to those being conducted by NHTSA and Takata in an industry-wide effort to find the reason for the defect to make sure it is fixed properly.

NHTSA also is opening its own testing program to focus on ensuring the remedy is completely safe. Rosekind said while the replacement air bags are safer than the ones they replace, he cannot guarantee their long-term safety at this time.

“We are doing our best to keep focused on the investigation,” said former NHTSA Administrator David Kelly who was hired to oversee the investigation by the automakers. Efforts to determine the root cause are still in the early stages of testing, he said.

Safety officials warn consumers to keep checking their vehicle VIN number on the www.safercar.gov website because even some of the vehicles previously fixed – or excluded in the past — could be back on the recall list in the future.

Consumer who receive recall notices should call their dealer immediately.

“Folks shouldn’t have to drive around wondering if their airbag is going to explode in their face or if their car is going to be on another recall list,” said U.S. Sen. Bill Nelson, D-Fla., the top Democrat on the Senate Commerce Committee and a key figure in a congressional probe into the defective airbags. “We’ve seen the recall list double now to 30 million cars. Let’s hope Takata’s admissions today tells us the whole story.”

Rich Newsome, an attorney representing seven victims of faulty Takata air bags, including Corey Burdick, a Florida man disfigured and blinded in one eye by shrapnel from an exploding air bag in May, called it a victory for consumer protection.

But, he said, “today’s expanded recall is already too little, too late for people injured and their families. Hopefully today’s news will push the agenda for recall reform to the forefront and result in legislation that will help NHTSA identify these kinds of defects before regular families with defective cars are needlessly harmed in the future.”

Automakers say they will continue to work with NHTSA and share test results. Honda said many of the recalls announced Monday already were included in previous safety campaigns and the automaker is “reviewing the information released (Monday) to determine what new actions may be required.”

Honda owners can check their recall status at www.recalls.honda.com or call 800-999-1009. Acura owners should go to www.recalls.acura.com or call 800-382-2238 and press option 4.

“A recall of this scope illustrates the potential for massive automaker expense and consumer inconvenience when a common, mass-produced part is defective,” said Karl Brauer, analyst with Kelley Blue Book.

“While this is the largest consumer recall in history it’s likely we’ll see future vehicle recalls of similar, if not larger, size as the automotive industry becomes more globalized.” Brauer said.

Takata boosted production to 450,000 replacement kits per month in March, up from 350,000. Other suppliers are also ramping up capacity to meet the demand the recall has created as the industry works to address the problem collectively.

Autoliv, another global supplier of airbags, said Tuesday it could make more airbag inflators than it has already promised to the industry.

In January, Autoliv committed to providing several automakers with as many as 25 million airbag inflators and could begin delivering them later this year.

“Our focus has really been to help the industry and the customers in this situation and clearly if we would be asked to supply more we would work to do that as rapidly as we could,” said Thomas Jonsson, spokesman for Autoliv.

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Toyota, Honda Have Best Supplier Relations in U.S.


For the fifth straight year, Toyota Motor Corp (7203.T) and Honda Motor Co (7267.T) topped a study of automakers with U.S. plants in supplier relations, helping them get the best parts at the lowest cost, reported Reuters.

Toyota was the tops in supplier relations, followed closely by Honda. Ford Motor Co (F.N) was a distant third, followed by Nissan Motor Co (7201.T). General Motors Co (GM.N) and Fiat Chrysler Automobiles NV (FCHA.MI) were tied for last place.

Those six are the largest automakers in the U.S. auto sales market and have the largest U.S. auto industry production footprints.

Lagging relations with suppliers means less profit, said the study’s author, John Henke, president of Planning Perspectives and a marketing professor at Oakland University near Detroit.

Toyota and Honda improved their scores by an average of 8.7 percent over the year, the study showed.

If the other four had improved their relations by as much they collectively would have added $2 billion in 2014 operating profit, Henke said.

GM would have earned another $750 million last year had its supplier relations improved 8.7 percent, the study found.

Suppliers have become more discerning about which companies they serve, said Henke, who has produced a study of relations of automakers and their Tier 1 suppliers for 15 years. A supplier will show its best new technology to the automaker that treats them best, he said.

Gone are the days when parts suppliers would build plants in order to take as much automaker business as they could get.

Suppliers “are not willing to put in the infrastructure to support all the business they could possibly get today because they don’t know what’s going to happen tomorrow,” said Henke.

The 2008-2009 recession “spooked” suppliers away from investing for work that has not been contracted yet, and the best of them became highly efficient, Henke said.

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Honda Hires U.S. Engineering Firm Exponent to Probe Takata Air Bags


Honda Motor Co has hired Exponent, a U.S.-based engineering consulting company enlisted by Toyota Motor Corp during its recall crisis in 2010, to investigate the cause of ruptures in some air bags made by Takata Corp, reported Reuters.

The hiring of Exponent was first reported by Japan’s Jiji News on Monday and confirmed by a Honda spokesman in Tokyo.

A consortium of 10 automakers led by Toyota Motor Corp and which includes Honda has separately commissioned engineering firm Orbital ATK to conduct independent testing of Takata’s air bag inflators, which can rupture with too much force, shooting metal shards into vehicles. Six deaths have been linked to the problem so far, all on Honda cars.

About 25 million vehicles with Takata air bags have been recalled worldwide since 2008.

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Honda Turns to New CEO After Crisis-Filled Era


Honda Motor Co.’s chief executive officer will step aside later this year as Japan’s third-largest carmaker reels from one of the biggest setbacks over quality in its history, reported Bloomberg.

In a surprise announcement on Monday in Tokyo, 61-year-old Takanobu Ito said he’ll hand over the reins to Managing Officer Takahiro Hachigo, 55, after the annual shareholders’ meeting in late June. Ito, the motorcycle-racing engineer who’s led Honda since 2009, said he handpicked Hachigo for his experiences running Honda’s various overseas businesses.

The CEO is ceding his job after leading the company through a tumultuous era that began with a global recession, followed by natural disasters and unfavorable exchange rates. Ito’s successor will face the challenge of navigating Honda past the latest crises, record recalls involving deadly Takata Corp. air bags and flaws with the popular Fit compact car, which have tarnished the company’s reputation for quality.

“Honda just got through its worst-ever period of quality problems,” said Takeshi Miyao, a Tokyo-based auto analyst at researcher Carnorama. “They’re getting a fresh start.”

Honda made the announcement at the 3 p.m. close of trading in Tokyo on Monday, after the carmaker’s stock fell 0.9 percent to 3,928.50 yen, paring this year’s gain to 11 percent.

While Ito will give up his roles as CEO and president, Honda said he will remain on the company’s board and serve as an adviser. Takashi Yamamoto, currently in charge of production, and Yoshiharu Yamamoto, head of Honda R&D, will also step down, according to the company.

Lowered Forecasts

The management overhaul comes weeks after Honda cut its profit forecasts for the second time in as many quarters because of recalls tied to Takata and new hybrid systems installed in the company’s Fit cars and Vezel SUVs. The quality missteps derailed Honda’s plans to introduce new models and led the carmaker to project its first profit drop in three years.

Ito this month also said the company will scrap its target of selling 6 million vehicles by 2017, which he said will ease a burden on engineers so they can focus on quality.
“It does a big favor to his successor,” said Christopher Richter, a Tokyo-based analyst at CLSA Ltd. “That was a sales program that Ito put in place. It’s very appropriate that he was the one then to say that we’re going to step back from that, rather than to have somebody new come in and then say ’oh, we’re not going to do this’ and create an image of discord.”

Chassis Roots

In choosing Hachigo, Ito turned to someone with similar roots. Both started their careers at Honda more than three decades ago as engineers designing chassis, the frame underneath that holds the key parts of a car together.

As an engineer, Hachigo was responsible for high-profile projects such as the U.S.-built Odyssey minivans that were launched in 1999 and the second-generation CR-V SUV that debuted in 2001. He then rose through the ranks with executive roles across the U.S., Europe and China before he was promoted to managing officer last year. Hachigo said he was in China soon after the new year when he learned of his next role. “I was surprised when I received a call from Ito,” Hachigo said in Tokyo on Monday. “I understand this is a major responsibility.”

Hachigo pledged Honda’s past efforts will bear fruit in 2015 and said that the company needs to step up development of products and technologies. He also said he plans to build on Honda’s six regional operations — an organizational structure his predecessor set up to shift Honda away from a U.S.-centric business mindset.
Era of Disasters

While Hachigo will follow the footsteps of a CEO who returned Honda to Formula One in 2015 and brought back the NSX supercar, he’ll also seek to avoid his predecessor’s misfortunes. Under Ito, Honda was roiled by the 2011 tsunami in Japan and mass floods in Thailand the following year. More recently, Ito has been plagued by recalls.

Honda has called back 14 million vehicles worldwide since 2008 to replace air bags made by Takata, in which it has a 1.2 percent ownership stake. Takata’s defective air bags, which can rupture during deployment and propel metal shards at passengers, have been linked to five fatalities in the U.S. and the deaths of a pregnant woman and her unborn child in Malaysia.

While at least nine other carmakers have been hit with air-bag-related recalls, Honda is Takata’s biggest customer. Scrutiny of how Honda responded to the flaws led to the U.S. government slapping the company with a record $70 million fine for failing to report more than 1,700 death and injury incidents to regulators over 11 years.

Air Bags

Honda’s quality problems go beyond air bags. The carmaker has called back the Fit — its top-selling model in Japan — five times since its introduction in late 2013, and recalled its Vezel crossover three times. Those fixes delayed the roll-out of other new vehicles by as long as six months.
As Honda takes steps to address quality shortfalls, Honda’s shares have begun rebounding. This month, the stock has climbed 10 percent through Monday, double the Nikkei 225 Stock Average’s gain.
“We knew this was coming sometime, although it was probably a little bit sooner than we expected,” said CLSA’s Richter. “Maybe this is a good time for a fresh face.”

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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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Toyota Recalls More Cars for Dangerous Takata Air Bags


Toyota Motor Corp said on Thursday it would recall 57,000 vehicles globally to replace potentially deadly air bags made by Takata Corp, as a safety crisis around the Japanese auto parts maker looks far from being contained, reported Reuters.

Toyota’s action follows a recall by rival Honda Motor Co for the same problem two weeks ago after revelations of a fifth death, in Malaysia, linked to Takata’s air bag inflator. More than 16 million vehicles have been recalled worldwide since 2008 over Takata’s air bag inflators, which can explode with too much force and spray metal fragments into the car.

Toyota is recalling some Vitz subcompacts, called Yaris in some markets, and RAV4 crossover models made between December 2002 and March 2004. About 40,000 are in Japan, 6,000 in Europe and the rest in other markets outside North America. Toyota said it was not aware of any injury or death related to the recall.

Separately, Toyota’s small-car subsidiary Daihatsu Motor Co also issued a recall, in Japan, of 27,571 Mira minivehicles produced between December 2002 and May 2003 for the same reason – its first recall involving Takata inflators.

About 2.6 million vehicles have been recalled in Japan so far for Takata’s air bag inflators, a transport ministry official said.

Takata-related recalls are almost certain to balloon after U.S. safety regulators on Wednesday ordered the company to expand a regional recall of driver-side air bags to cover the entire United States, not just hot and humid areas where the air bag inflators are thought to become more volatile.

Takata has so far resisted expanding the recall, saying that could divert replacement parts away from the high-humidity regions that need them most.

TUESDAY DEADLINE

The U.S. National Highway Traffic Safety Administration (NHTSA) has given Takata until Tuesday to issue a nationwide recall, and could fine it up to $7,000 per vehicle if it doesn’t comply. It remains unclear how many more vehicles that would add, but it could be in the millions, affecting five automakers: Ford Motor Co, Honda, Chrysler Group LLC, Mazda Motor Corp and BMW AG.

A U.S.-wide recall of driver-side air bags could cost an estimated 70 billion yen ($600 million), Nomura Credit Research analyst Shintaro Niimura wrote in a Nov. 26 report.

“Takata could need nearly 200 billion yen ($1.7 billion) of reserves in the event of a U.S. nationwide recall (including passenger-side air bags), and the company’s cash-on-hand would be tightly squeezed,” he wrote, noting Takata had just 8.33 billion yen of cash and deposits.

“If the company makes any missteps, we cannot say that there is ‘zero’ chance of the company dying a sudden death – that is, being hit with excessive debt or facing a cash-insolvency bankruptcy,” Niimura added.

SHARES HIT

NHTSA’s action and the latest recalls come on the heels of an announcement by Japan’s transport ministry on Wednesday that it received a report of an “unusual deployment” of a Takata air bag as it was being removed from a scrapped car on Nov. 6. The inflator was manufactured in January 2003 at Takata’s Monclova, Mexico factory, and had not been subject to recalls, at least in Japan, raising the prospect of an expanded recall, the ministry said.

A Toyota spokesman said the scrapped car was a 2003 Will Cypha, a Japan-only compact model that is no longer in production. Toyota said it was investigating the issue as part of its wider probe into Takata’s air bag inflators. “We will take prompt and appropriate action if we find there is a need for a recall as a result of the investigation,” it said.

Takata shares dropped as much as 7.9 percent in Tokyo on Thursday, closing down 4.8 percent. Toyota shares eased 0.5 percent and Daihatsu shares slipped 1.2 percent, roughly in line with the broader market. Shares of Honda, Takata’s top customer, underperformed other auto stocks, falling 3.3 percent.

Honda had said the Takata air bag inflator that failed in the Malaysia crash had likely been exposed to excessive moisture at the supplier’s now-shuttered plant in LaGrange, Georgia. A transport ministry official said no further recalls are expected in Japan related to the problem identified at the LaGrange line between November 2001 and November 2003.

A second U.S. congressional hearing is scheduled for Wednesday, where representatives from Takata, NHTSA and several automakers will testify.

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