Deeply affected by the airbag crisis triggered by Takata, Honda posted another annual loss, while it also reportedly prepares to expand the recalls.
Japan’s third-largest automaker by sales recalled so far around 30 million vehicles over Takata’s potentially deadly airbags, accounting for half of the massive worldwide safety crisis. However, Honda’s troubles are going to deepen even further, as it plans to add another 21 million cars to the campaign, according to a report from The New York Times. The paper said the announcement was made by the company’s vice president Tetsuo Iwamura, an expansion that follows the recent notice from the US National Highway Traffic Safety Administration which ordered carmakers two weeks ago to fix additional 35 million to 40 million inflators by 2019. Iwamura did not specify how many of these new vehicles were in the United States, but many of them were likely to be part of the recent US recall expansion.
Fixing millions of inflators is a costly business and this burden reflects in the automaker’s financial report for the year ended on 31 March. Honda said its consolidated profit for the fiscal year amounted to 344.5 billion yen (3.17 billion dollars), a 32.4 percent drop compared to the previous one. “This was despite profit-increasing factors such as an increase in profit related to the full model change of key models in North America and the introduction of HR-V in various regions as well as cost reduction efforts,” the company stated.
For the three months of this year, Honda posted a net loss of 93.4 billion yen (860 million dollars), a period in which it was expected to bring profit. The company said it had set aside a total 436 billion yen for air bag-related costs in the last business year, nearly quadruple the 120 billion yen in the previous year. However, due to a stronger yen, Honda expects its profit to rise to 390 billion yen at the end of the current fiscal year.