Tag Archive | "Honda"

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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U.S. Auto Regulator Seeks Nationwide Recall of Takata Air Bags


The U.S. auto safety regulator has told Japanese supplier Takata Corp and five automakers to expand nationwide a regional recall of potentially lethal air bags, increasing pressure on the industry to move faster in a growing scandal, reported Reuters.

The National Highway Traffic Safety Administration (NHTSA) also scolded Takata for what it called “an unwillingness to move forward” on a nationwide recall, and said the company needs to be open with the U.S. public about the risks of its air bags.

Takata and automakers have so far taken a targeted approach in recalling U.S. vehicles with air bags that can rupture upon deployment, shooting shrapnel into the car. Five fatalities, including four in the United States, have been linked to the air bags.

The U.S. regional recall has involved 4.1 million cars in hot and humid areas where the air bags may be prone to fail, including Florida, Alabama, Mississippi, Georgia, Louisiana and parts of Texas along the Gulf of Mexico. Most of those cars are made by Honda Motor, Takata’s biggest client.

In a call with reporters on Tuesday, NHTSA Deputy Administrator David Friedman declined to estimate how many more cars would be included in a nationwide recall.

Shares in Takata dropped by as much as 7.8 percent in Tokyo on Wednesday, and have now slid 64 percent this year to 5-1/2-year lows.

Takata has already set aside more than $750 million for recall-related costs, but Takayuki Atake, manager of credit research at SMBC Nikko Securities, warned a national recall would need more provisioning and raised the risk of a deeper credit rating downgrade than initially expected.

Japan Credit Rating Agency has put Takata’s single-A rating on negative watch. “However, risk of a (three-notch) downgrade to BBB would increase if the expanded recall leads to further erosion of shareholder equity and/or a negative impact on Takata’s capacity for generating profits and cash flow,” Atake wrote in a report.

Takata, NHTSA, Honda and Chrysler have been called to testify at a U.S. Senate Commerce Committee hearing on Thursday, where Takata will be represented by Hiroshi Shimizu, a 36-year company veteran and senior vice president of global quality assurance.

MILLIONS MORE?

Around 16 million cars with Takata air bags have been recalled worldwide over the past six years, with more than 10 million of those in the United States.

NHTSA’s Friedman said the recall expansion was prompted by an August incident involving a 2007 Ford Mustang in North Carolina, outside the area of the regional recalls.

The agency ordered Ford, Mazda Motor, Honda, Chrysler and BMW to send notifications for replacement driver-side air bags to consumers quickly. “We will begin a process both with Takata and the automakers to force them to recall all affected” vehicles, Friedman said.

Ford, Honda, Mazda and Chrysler said they would continue to cooperate with NHTSA and plan to evaluate their call for a national recall. But each stopped short of saying they would expand beyond the current set of cars they are fixing. BMW is already recalling air bags nationally.

Spokesman Alby Berman said Takata would cooperate with regulators and automakers if an expanded recall is required, but noted that “of almost 1,000 passenger and driver inflators from outside the high humidity areas that have been evaluated to date, none have ruptured.”

“Takata is concerned that a national recall could potentially divert replacement air bags from where they’re needed, putting lives at risk,” he said in a statement.

It’s unclear just how long it could take to replace so many air bags. NHTSA said it is pressuring Takata to ramp up production of replacement parts and has said it will explore using other suppliers to help with production if needed.

Takata has said it would add two production lines at its Monclova, Mexico plant in January to make replacement air bag inflators. Workers there have told Reuters that a single line has a typical quota of around 200 inflators an hour, meaning it could take five months to make 1 million inflators working around the clock on two lines, five days a week.

NOT ENOUGH

Auto safety advocates and lawmakers said NHTSA’s latest move may still not capture the scope of the problem, is too late, and may not be enforceable.

Democratic Senators Ed Markey and Richard Blumenthal said they were pleased NHTSA recognized the “national scope” of the problem,” but said the call to replace driver-side air bags should be expanded to also include passenger air bags.

NHTSA agreed in June to allow automakers to do a regional recall and use their discretion in deciding how and when to notify customers and replace faulty parts, resulting in confusion for car owners receiving mixed messages.

Friedman criticized Takata for resisting when NHTSA this week called on it to issue a defect notification nationwide for air bags of a certain design. “Takata’s initial response was an unwillingness to move forward, and frankly, that is one of the reasons we are talking to you today, because I believe everyone needs to understand that Takata needs to act,” he said.

Asked about Friedman’s comment, Takata said: “We have been dealing sincerely with U.S. authorities and … will continue to do so, prioritizing customers’ safety.”

NHTSA also addressed lingering confusion over what exactly makes some air bags explode. It said it ordered Takata to provide under oath documents and information on the propellant used in newly designed air bag inflators, after Takata recently said it had changed the chemical mix of its inflators.

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