Takata airbag recall causes Honda loss

Jessica TranterLast Update : Friday 13 May 2016 - 2:18 PM
Takata airbag recall causes Honda loss

Honda makes surprise loss after Takata airbag recall

Honda carImage copyright AFP

Japanese carmaker Honda made an unexpected fourth quarter loss after facing higher quality-related costs for recalls of its cars that use potentially deadly Takata airbags.

Quality costs rose nearly four-fold as a result.

Honda made a loss of 93.4bn yen ($859.56m), compared with the 115.35bn profit expected by analysts.

The company said full-year results included 267bn yen more in costs than its original estimate.

Honda, which is Japan’s third-biggest car maker, set aside a total 436bn yen for airbag-related costs last year, compared with 120bn yen the year before.

Some 50 million cars that use Takata airbags have been recalled globally after they were blamed for at least 11 deaths, mostly on cars made by Honda, the supplier’s biggest customer.

US authorities said earlier this month that Takata must file new defect reports covering 35-40 million additional inflators that will lead to recalls by automakers.

US regulators believe the volatile chemical used in the inflators, ammonium nitrate, can cause airbags to explode with excessive force.

Globally, 12 car makers are affected, with Japan’s Honda being the worst hit.

Takata has acknowledged some airbag inflators explode with too much force and spray metal shrapnel into the car.

Source: BBC Business

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2016-05-13 2016-05-13
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Jessica Tranter