Honda Starts Third Party Audit Into Injuries and Deaths

By Jeff Plungis and Jeff Green | October 17, 2014

Honda Motor Co. asked a third party to determine whether the automaker underreported fatality and injury claims to the U.S. government, which is investigating airbag failures with potentially deadly defects.

The third-party audit began in September and Honda will soon share its findings with the National Highway Traffic Safety Administration, the Tokyo-based company said in an e-mailed statement. Honda disclosed the audit after The Center for Auto Safety, a watchdog group, said the company didn’t report at least two injury-and-death incidents to NHTSA and called for the U.S. Justice Department to conduct a criminal investigation.

Honda said it excluded verbal claims of fatalities and injuries in reports to NHTSA until last month, a practice it says accounted substantially for the fewer reported incidents compared with other automakers. The Center for Auto Safety said Honda’s failure to share the information hampered the U.S. government’s oversight and efforts to spot auto-defect patterns.

“The damage to their reputation could be very big,” Seiji Sugiura, an auto analyst at Tokai Tokyo Research Center, said by phone. Honda “should take responsible action, especially in the U.S., because it’s their most important market.”

The issues being raised center on Takata Corp. — a major supplier of air-bag inflators to Honda, Toyota Motor Corp. and Nissan Motor Co. — and how the car companies have responded to defects with the components. Honda is the biggest customer of Tokyo-based Takata and has said it’s called back 6 million vehicles for problems with air bags in nine recalls since 2008.

NHTSA Investigating

Regulators are in contact with Honda over its early-warning reporting to determine compliance, Karen Aldana, a spokeswoman for NHTSA, said in a statement. NHTSA has started an aggressive investigation into Takata air-bag failures and urged automakers to immediately recall vehicles with the highest risk.

NHTSA “will take appropriate action, including expanding the scope of the recall, if warranted,” Aldana said.

Honda said it has provided NHTSA detailed information relating to all known ruptures of Takata air-bag inflators. The company also said that current law does not require manufacturers to report verbal death-and-injury claims.

The company’s shares fell 3.5 percent as of 1:05 p.m. in Tokyo trading, while the Nikkei 225 Stock Average declined 1.9 percent.

Honda failed to notify NHTSA of several air-bag incidents that led to deaths and lawsuits, the Center for Auto Safety said in its letter yesterday to David Friedman, the agency’s deputy administrator. The Washington-based group cited a 2009 fatality and an August 2013 incident resulting in serious injury that weren’t included in Honda’s early warning reports.

Warning Reports

Automakers are required under a 2000 law to file quarterly reports to NHTSA about fatalities, injuries, lawsuits, warranty claims and customer complaints. The safety agency is supposed to analyze Early Warning Reports to spot trends suggestive of safety defects as soon as possible.

“The whole purpose is to get to major defects quicker,” Clarence Ditlow, executive director for the Center for Auto Safety, said yesterday in an interview. “You can’t protect the public if a company doesn’t turn over EWR reports.”

General Motors Co. reported 1,716 early warning injury-and- death claims to NHTSA last year, while Toyota logged 1,774, according to Ditlow’s group. Honda during that same period reported 28, the center said. In the first quarter of 2014, GM reported 505, Toyota 377 and Honda six, it said.

“It is our understanding that some manufacturers choose to include these types of verbal claims, and that these constitute the majority of the injury-and-death claims that they report to the NHTSA,” Honda’s U.S. unit said in the e-mailed statement. “We believe this practice accounts for the vast majority of the difference between the total number of injury-and-death claims reported by Honda compared to certain other manufacturers.”

Senators’ Letter

Democratic U.S. Senators Edward Markey of Massachusetts and Richard Blumenthal of Connecticut wrote to NHTSA yesterday expressing alarm over the agency’s use of limited “regional” recalls to address defects like the Takata air bags.

Noting the allegations by the Center for Auto Safety against Honda, Markey and Blumenthal asked NHTSA for additional information about how the agency ensures compliance with reporting requirements.

“We are concerned that NHTSA has not made real efforts to determine whether automakers have complied with this requirement to alert the public to potentially deadly defects,” they said in a statement.

(With assistance from Craig Trudell and Ma Jie in Tokyo.)

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