Honda Motor Co., Ltd.’s (HMC) shares decreased 1.9% to $30.54 on Dec 8, 2014 after the automaker announced that it is increasing the number of vehicles to be repaired for faulty Takata-made airbags. The company will replace the driver's side air bag inflators in 2.6 million vehicles in the U.S.
In order to satisfy all customer concerns due to the faulty air bags, Honda is expanding repairs of vehicles to include the entire U.S. Moreover, Honda is the only Japanese automaker to abide by the U.S. National Highway Traffic Safety Administration’s request to repair vehicles with faulty air bags, nationwide.
Honda is repairing the vehicles under a safety improvement campaign. With this, the total number of vehicles for repairing covered by Honda will stand at 5.4 million, including its most popular models. The vehicles mainly include 2001 to 2007 four-cylinder Honda Accord, 2001 and 2002 V6 Accord, 2001 to 2005 Honda Civic, 2002 to 2006 Honda CR-V, 2003 to 2011 Honda Element, 2002 to 2004 Honda Odyssey, 2003 to 2007 Honda Pilot, 2006 Honda Ridgeline, 2003 to 2006 Acura MDX, 2002 and 2003 Acura TL, and the 2002 Acura CL.
The driver-side air bags manufactured by Takata have an inflator that was produced with a faulty part. Thus, when an air bag is deployed, the inflator can explode and shoot out metal fragments into the vehicle. There have been reports of five deaths worldwide associated with this problem. As a result, automakers have been forced into recalling a series of vehicles.
The recalls were mainly in high-humidity areas in Southern U.S., Hawaii and some other territories along the Gulf Coast, as prolonged exposure to airborne moisture leads the inflator to burn faster and ruptures the metal inflator container.
Customers in high-humidity areas have already been informed about the repair of faulty driver's side air bag inflators, via mail. Other customers in different parts of the country will be informed soon. However, for passenger-side air bag inflators, the automakers will only recall vehicles from high-humidity areas.
Takata recently refused to abide by the U.S. government’s request for a nationwide recall for its air bags. Other automakers including Chrysler Group, Ford Motor Co. (F), Mazda and BMW are yet to reach a decision about the nationwide repairs.
Currently, Honda carries a Zacks Rank #4 (Sell). Investors interested in the auto industry could consider better-ranked stocks like Gentex Corp. (GNTX) and STRATTEC Security Corp. (STRT), both sporting a Zacks Rank #1 (Strong Buy).
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