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Plagued by recalls, Honda cuts sales forecast

Plagued by recalls, Honda cuts sales forecast
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Honda has trimmed its full-year sales forecast while announcing quarterly operating profit fell by 4.1 percent.

It blamed “tough” competition in Japan and China as well as the impact of recalls.

The Japanese carmaker’s chief executive and 12 other top bosses have taken pay cuts because of five separate recalls for the hybrid version of its Fit model in the year since its launch.

“As a result of this (latest Fit) recall, we have had to do a full inspection of all the new models” in the pipeline, Honda Executive Vice President Tetsuo Iwamura said. “This has caused a delay – and it differs according to model – but some by as much as six months.”

The direct consequence is Honda selling 80,000 fewer vehicles in Japan this business year ending March, Iwamura said.

Overall, Honda cut its sales forecasts for Japan and China by 100,000 vehicles each, and left its North America estimate unchanged. It lowered its global forecast by 4.0 percent to 4.62 million vehicles.

Airbag issues

The results came on the day Honda was named as a defendant in a proposed class-action lawsuit over recalls of vehicles with air bags made by Takata that have been linked to four deaths – all in Honda cars.

Clouding the outlook is the risk of more Takata-related recalls in the United States – Honda’s biggest market – where the National Highway Traffic Safety Administration is investigating reported failures of Takata air bag inflators in places with hot, humid weather.

The investigation is centred on whether hot and humid conditions cause the inflators to explode with dangerous force in the event of a collision.

Around half of Honda vehicles produced in 2014 used Takata air bags. Of that total, half use Takata’s inflators, while the rest use inflators supplied by Daicel, Iwamura said.

Honda expects to collect all recall-related costs from Takata, another executive said.

with Reuters