Honda modifies its financial books after considering charge for expanded airbag recalls image
Honda Motor Co, the third largest Japanese automaker and the biggest customer for Japan’s auto safety supplier Takata Corp. has decided to restate its earnings for the past business year.
The carmaker has modified its financial results for the financial year ending this March in order to account for the increased costs stemming from the expanded safety campaigns for cars that have been equipped with Takata’s potentially defective airbags. The parts manufacturer has been at the heart of a massive safety crisis after recalling since 2008 tens of millions of cars worldwide, across eleven auto manufacturers, after equipping them with airbag inflators that can explode with too much force, sending inside the cabin at high velocity shrapnel and metal debris. A total of eight fatalities, all in Honda vehicles, have been tied to the flawed safety parts.
Honda, Japan’s third biggest automaker, has said its revised operating profit has reached 606.88 billion yen ($4.92 billion) under U.S. accounting standards, down from 651.68 billion yen stated in April. The new figure is 19 percent smaller than before. According to international standards, which are being used by Honda for the first time as they were adopted this year, operating profit was 670.6 billion yen last year, again sliding 19 percent from the previous year. Honda said earlier this month it would proceed to modify its earnings because it had to account for an additional recall cost of 44.8 billion yen following Takata’s agreement with US auto safety regulators to expand its safety campaign in the United States to almost 34 million autos last month.