Recalls cost Honda more than expected

Japan’s third largest automaker forecasts additional spending of $363 million on car recalls fitted with Takata airbags

Photo by: Reuters
Photo by: Reuters

Updated Jul 28, 2015

Honda said on Friday that it would revise its financial results for the last business year as it anticipates that it will pay a further $363 million, after Takara agreed to an expansion of recalls in the US of vehicles were equipped with faulty airbags.

Honda’s spokesman Teruhiko Tatebe said additional quality costs will be reflected in Honda’s profits from the last financial year which ended in March rather than the current year. This is due to US accounting rules considering additional spending on recalls something that should have been foreseen and taken care of during the last business year. 

Although there has been a rise in recall related costs, Honda said it will keep its profit and dividend outlook stable for the current financial year. In April the company said its operating profit for the year ending in March was 651.7 billion yen, falling 13 percent compared to the previous year.  

A total of six deaths in Honda vehicles have been linked to a defect in Takata’s air bags. An additional 100 injuries have also been reported. 

TRTWorld and agencies