Honda rethinks earnings as it needs to incorporate expanding Takata airbag safety campaigns image
The third largest Japanese automaker, Honda Motor, announced on Friday it was going to modify and restate its financial results for the past business year as it needs to take into consideration around $360 million in additional costs.
The payment is needed to cater for the recall of models equipped with airbags produced by Japanese auto safety supplier Takata Corp. The parts manufacturer has been recalling, alongside eleven automakers, since 2008 millions of autos across the world (around 53 million today) to replace potentially flawed airbag inflators that can explode with too much force and send metal shards and other debris inside the cabin at high velocity. Recently, the Japanese supplier and the NHTSA announced the recall of almost 34 million autos in the US, the largest single-product safety campaign in the history of the country. The latter expansion was the reason Japan’s third-largest automaker issued a statement to say it was spending around 44.8 billion yen ($363 million) more to cater for its top supplier of airbags related expenses.
According to a Honda spokesperson, the accounting rules in the United States are forcing the company to tally the additional quality costs in the financial statement of the year that ended March 31. Late April, Honda said its operating profit amounted to 651.7 billion yen for the past fiscal year, falling 13 percent from the previous year. Honda is Takata’s biggest automotive client, with all six deaths so far linked to the airbag issue in cars made by Honda or its subsidiaries.