Honda faces recalls of airbags and new hybrid system

Issues include finding airbag replacement parts and lowered sales forecast

2015/01/23

Summary

The JADE
The Jade, a new passenger car equipped
with the same hybrid system as the Fit.
(to be  launched in February 2015)

 This report covers details and effects of the two major recalls that Honda Motor Co., Ltd. recently faced. Honda reported recalls of the new hybrid systems first mounted on the Fit Hybrid as well as Takata Corporation's airbags equipped in Honda vehicles.

 As for the Fit Hybrid and the Vezel Hybrid, Honda introduced a new, complex system to connect the engine and the motor with a Dual Clutch Transmission (DCT) and to synchronize them with the brake system as well. The OEM admitted that this complex system had not been verified enough, though it provides so many possibilities in combination.

 Honda plans to add a process early in the vehicles'development stage and install a system for controlling independently developed element technologies into a prototype vehicle and test how smoothly they function together in a vehicle.

 Affected by recalls of the Fit Hybrid and the Vezel Hybrid, Honda revised its forecast for FY 2015 sales in Japan downward to 930,000 units from originally planned 1.03 million units. Concurrently, the FY 2015 production in Japan is to fall by 30,000 to 40,000 units from 937,000 units last fiscal year.

 As for the Takata airbag issue, Honda vehicles to be recalled totaled 13 million units at the end of 2014, accounting for over 50% of all the suspect vehicles. The number of recalled vehicles is huge in the U.S. because flaws in quality control at Takata's plants in the U.S. and Mexico were initially blamed as the cause of the malfunction.

 Since around 2013, it has been found that many explosion incidents happened in areas of high absolute humidity. Honda, therefore, started voluntarily in June 2014, the investigative recall for all the suspect vehicles in highly humid areas of the Southern U.S. Furthermore, in order to meet the request by National Highway Traffic Safety Administration (NHTSA), Honda announced nationwide expansion of this action. (This action is not a regular recall in a sense that no defect cause has been identified, but an OEM voluntarily retrieves all the suspect components, replaces them by new ones and investigates them to identify the problem. It is reported as "investigative recall" in the news media and Honda calls it "Safety Improvement Campaign (SIC)."

 Influence of the airbag recalls on Honda's sales in the U.S. has been reported as comparatively small and its light vehicle sales in 2014 increased to 1.54 million units, up 1% year on year (y/y), although the market share dropped to 9.4% from 9.8% y/y. Once the investigative recall is expanded nationwide, however, supply of replacement parts could present a large problem.


Related reports:
Honda Fit Hybrid teardown (Part 1): Battery components & brake system (Dec. 2013)
Honda Fit Hybrid teardown (Part 2): Engine and transmission (Dec. 2013)



Five recalls of Fit Hybrid and Vezel Hybrid

 Honda conducted five recalls of the Fit Hybrid that was launched in September 2013. The recalls were reported in October and December 2013 and February, July and October 2014. The Vezel Hybrid, launched in December 2013, was also subject to these last three recalls. A total recall population is approximately 620,000 units. The first three recalls were due to problems with the software program controlling the 7-speed DCT, with a different cause for each recall. The fourth recall was due to malfunction in starting the engine by the motor during electric drive mode. The fifth recall was due to a defect in the noise filtering systems in the ignition coil and the power supply circuit.

 According to Honda, the defect was not discovered during the development and product quality verification processes prior to the introduction of a new technology to the market. It also admitted that especially, product quality verification in low-speed running was not enough and that increasingly complex software program negatively affected the system operations.

 Responsible Honda top executives took pay cuts and in November 2014 the OEM created a new executive post in charge of quality reform.

Recalls of the Fit Hybrid and the Vezel Hybrid in Japan

Notification Models
(Hybrids)
Number
of units
subject
to each
recall
Outline Measures
Oct.  2013 Fit 4,883 Due to an incorrect software program for the automatic transmission control computer, some vehicles equipped with the 7-speed DCT could have experienced problems such as an inability to start driving when first gear does not engage. To install the new control software program
Dec. 2013 Fit 36,100 Due to an incorrect software program for the transmission driver unit, some vehicles equipped with 7-speed DCT could have experienced the non-engagement of gears, a delay in starting the vehicle, and inability to drive the vehicle from a parked position. To install the new control software program
Feb. 2014 Fit and
Vezel
81,353 Due to the non-engagement of first gear, some vehicles equipped with the 7-speed DCT could have experienced the failure to begin driving, backward rolling on a slope, and a failure to accelerate. The recall population included vehicles that were subject to the first and second actions in October and December 2013. To replace the DCT component and install the new control software program
Jul.  2014 Fit and
Vezel
175,356 When starting an engine by the motor during electric drive mode, there was a danger that the motor generated too large driving force. To install the new control software program
Oct.  2014 Fit and
Vezel
321,501 1) Flaws in the noise filtering system in the ignition coil could have reduced the output of the ignition coil, which may lead to malfunction of the engine.
2) Insufficient filtering of the electrical noise in the power supply circuit could have caused glitches in the ECU (electric control unit), which could cause the engine stall.
To replace the ignition coil, install a noise filter in the power supply circuit
Accumulated total 619,193
Source: Honda's press releases, Nikkan Jidosha Newspaper Aug. 28, 2014, Oct. 27, 2014; Automotive News Oct. 6, 2014.
Note 1.  83,675 units of the gasoline-powered Fit were included in the Oct. 2014 recalls.
2.  The Fit Hybrid is not sold in North America.

 

Honda halted new model launches for almost a year

 Due to the five recalls of the Fit Hybrid and the Vezel Hybrid, Honda had put off twice the release of the Grace Hybrid Sedan, equipped with the same hybrid system as the Fit and the Vezel, from the originally planned spring of 2014 to the summer, then to early December. Honda also delayed the launches of the upgraded Legend, the Jade (supposedly the Stream's successor), the N-Box Slash and the Fit Shuttle, which had been scheduled to follow the Grace Hybrid. The OEM, therefore, was not able to release a new model in Japan for almost a year after the Vezel launch in December 2013 up to the Grace launch in December 2014.

 

 



Honda adds another R&D process to test control system in prototype vehicle

 According to Honda, the repetitive recalls of the Fit and Vezel Hybrids were due to the coordinated systems that control the engine, motor, DCT and brake systems, and the enormous amounts of complex combinations of these systems had not been adequately verified.

 Even if each system does not have any problem, new technology and systems with increased complexity may possibly result in malfunction when they work together in a prototype vehicle. Honda, therefore, plans to add a process early in the vehicles' development stage and install a system for controlling a system for independently developed element technologies in a prototype vehicle and test how smoothly they function together in a vehicle.

 

 



Developments of airbag recalls and Takata's opinion on root cause

 In 2007, Takata airbag inflators equipped in Honda vehicles ruptured unusually and the malfunction of Takata airbags became an issue. The manufacturing process was blamed as a cause in the beginning.

Developments of the airbag recalls, from Takata's testimony at the U.S. House Committee Hearing

First phase
2008
 In 2007, inflator rupture incidents happened to Honda vehicles equipped with Takata driver-side airbag inflators, which resulted in the first phase of recalls. (Airbag inflator is a device to generate gas to inflate the airbag.) These inflators were manufactured exclusively for Honda vehicles at Takata's plant at Moses Lake, Washington, the U.S. between 2000 and 2001. One of the causes was related to insufficient pressing of propellant wafers for the driver-side airbag inflators.
Second phase
2009-2012
 From 2009 to 2012, there were reports of inflator ruptures involving passenger-side airbags manufactured from 2000 to 2002. They resulted in a recall of vehicles primarily sold in Asia. Separately, several OEMs announced global recalls of vehicles equipped with certain types of Takata airbag inflators beginning in 2013.
 The causes of these recalls seem to be specific manufacturing and product-handling problems involving inflator propellant, including absolute humidity in the manufacturing process.
Third phase
2013-2014
 In 2013 and 2014, there were several additional incidents of inflator ruptures involving both driver-side and passenger-side airbag inflators manufactured after 2002. Almost all of these have involved vehicles used in high absolute humidity areas such as Puerto Rico and South Florida for six years at least.
Takata's opinion on the cause of inflator ruptures
 Takata believes that the root causes of the inflator ruptures involve a combination of (1) the age of the inflator; (2) persistent exposure over an extended period of time to high absolute humidity; and (3) potential production issues. The airbag supplier is working to identify and address potential problems in the manufacturing process in addition to those it has worked to improve.

Source: Takata Corporation's publicity material released in Dec. 2014 (From the testimony at the Hearing before the US House Committee on Energy and Commerce on Dec. 3, 2014)


As for the third phase recalls in the above chart, lengthy exposure to high temperature and humidity in Florida and other areas as well as the age of the inflator have been focused since around 2013 as causes of the malfunction. Takata and ten OEMs have conducted voluntary field actions to retrieve and investigate all the suspect inflators in high absolute humidity areas since June 2014, which resulted in some regional recalls. NHTSA and the U.S. Congressmen present at November and December 2014 hearings, however, urged the OEMs to expand the regional recalls to a national level. NHTSA reported an incident outside an area of high absolute humidity and called on Takata to declare these inflators defective. Takata believes that the identified areas of high absolute humidity should be the priority for the replacement and has turned down NHTSA's demand to declare these inflators defective, saying that the root cause has not been determined yet.

 The investigation into the cause of Takata inflator ruptures is regarded as very difficult because the focus of the problem is inflator propellant, which is outside the common automotive physics. Every time a recall was announced, people concerned thought that things should be OK then. New problems, however, came up one after another and Takata repeatedly recalled its products.

 

NHTSA's request for national recalls and Takada's opinion

Regional recalls and replacement  Based on the above-mentioned engineering analysis, and at NHTSA's suggestion, in June 2014, Takata and ten OEMs voluntarily commenced regional actions to retrieve all the inflators in highly humid areas in the U.S., including Puerto Rico, Hawaii, Florida, and the U.S. Virgin Islands. Honda and some other OEMs include California and several other states.
Takata's investigation  Takata has tested returned airbag inflators, both from within the areas of high absolute humidity and from outside those areas. The results have shown ruptures only in passenger-side inflators retrieved from vehicles in the high absolute humidity areas.
Takata's current judgment  Takata believes that high absolute humidity areas should be the current priority for the replacement of suspect inflators. If a nation-wide recall was determined as necessary, Takata believes that it should be conducted in a phased manner to ensure that the supply of replacement units continues to be directed first where they are needed most - to vehicles in the high absolute humidity areas.
 Takata has turned down NHTSA's request to declare these inflators defective, saying that the root cause has not been determined yet.
Production of replacements  Takata has been producing 350,000-replacement kits per month, which will be expanded to 450,000 kits per month from January 2015. In case that the areas for recalls are largely expanded, it will ask for cooperation of other inflator suppliers including Autoliv Inc. and Daicel Corporation.
Takata airbags are safe  Takata is confident that its inflators currently produced, including the replacements for recalled units, are safe.

Source: Takata Corporation's publicity material released on Dec. 4, 2014 (From the testimony at the Hearing before the U.S. House Committee on Energy and Commerce on Dec. 3, 2014)

 

 



Honda to expand recalls nationwide in the U.S.; concerns for replacement parts

 Starting from 2008 through 2014, Honda conducted seven nationwide recalls due to a certain malfunction of Takata airbag inflators in the U.S., which was presumably derived from its manufacturing process. Based on the analysis that high temperature and absolute humidity are related to the cause of the defect, Honda has voluntarily recalled 2.8 million vehicles in eleven U.S. states that consistently experience significantly high absolute humidity. Honda calls this action to voluntarily replace and investigate all the suspect airbag inflators "Safety Improvement Campaign (SIC)."

 In response to NHTSA's request at the U.S. House Committee Hearings in November and December 2014, Honda announced its plan to expand the regional SIC for the eleven southern states to a national SIC. Up to this point, Honda had intended to "wait for Takata's investigation to determine the cause." Considering the U.S. public opinion, however, it reportedly has shifted its priority from the search for the cause to customers' safety and peace of mind.

 When Honda expands the SIC nationwide, the subject vehicles will total 5.4 million units, including those recalled in highly humid areas. If the other OEMs join Honda in expanding recalls nationwide, the number will mount to 7.8 million units including Honda vehicles, according to NHTSA. Even if the OEMs ask Autoliv, TRW Automotive and Daicel to manufacture replacement inflators, some consider that it should take a year or so to adjust them to Takata airbags and to test them. The issue, therefore, is considered to become serious eventually for the U.S. automotive industry as a whole.

Honda's actions in the U.S. after June 2014

Date of announcement Event Outline
Jun. 2014 Regional SIC commenced in the U.S.  In June 2014, Honda started a Safety Improvement Campaign (SIC), field actions to retrieve and investigate the entire suspect, driver-side airbag inflators of specific model years and models in eleven U.S. states and territories including Alabama, California and Hawaii. Absolute humidity is quite high throughout the year in these regions. 2.8 million vehicles, mainly 2001 through 2007 models, are to be covered. For certain models of some specific model years, passenger-side inflators will also be replaced.
Nov. 18, 2014 NHTSA's demand  NHTSA demanded Honda to expand the regional recalls to a national level.
Nov. 21, 2014 U.S. Senate Committee Hearing  At the November 20 Hearing before the U.S. Senate Committee on Commerce, Science and Transportation, the U.S. Honda representative made clear that it would continue to serve its customers for the airbag issues in cooperation with its suppliers and the regulatory authorities.
Dec. 3, 2014 Nationwide expansion of SIC announced at the Hearing  At the December 3 Hearing before the U.S. House Committee on Energy and Commerce, Subcommittee on Commerce, Manufacturing and Trade, Honda announced expansion of its regional SIC to a nationwide campaign. It also revealed that it would work with Autoliv and Daicel, both airbag inflator suppliers, in addition to Takata, to ensure enough replacements. In case that customers should wait for replacement, Honda will provide a substitute vehicle free of charge.
Dec. 8, 2014 Recalls expanded nationwide to 5.4 million units in the U.S.  Honda announced that it would recall a total of 5.4 million vehicles of 2001 through 2011models sold in the U.S., including 2.8 million vehicles in the high absolute humidity areas.

Source: Honda's press releases

 

 



Honda's actions in Japan

 Following the announcement that Honda would expand the voluntary retrieval and replacement campaign nationwide in the U.S., it announced that also in Japan it would recall and investigate all the 134,584 vehicles equipped with the same Takata inflators on a national level.

 Following an explosion of a Takata passenger-side airbag inflator case in a Toyota vehicle at a scrap yard, Toyota Motor Corporation announced on December 4, 2014 that it would issue a preventive recall of vehicles mounting the Takata inflators of the same type and model year. Specifically, Toyota will replace the subject inflators by non-defective ones and investigate the recalled ones to identify a cause of the incident. Honda also announced that it would voluntarily retrieve and investigate all the 174,006 vehicles equipped with the same type passenger-side inflators.

Honda to conduct "Investigative recall" of all the suspect airbag inflators in Japan

Dec. 9, 2014 Investigative recall of driver-side airbag inflators  Following the determination that Honda would expand the regional SIC, conducted in persistently humid areas, to a national level in the U.S., it announced retrieval of all the driver-side inflators of the same type in Japan, where no defect had been identified, in order to determine the cause as soon as possible.
 Honda will replace the suspect inflators with new ones and study those removed to investigate the cause of the malfunction. In Japan, it will start recalls from highly humid Okinawa area as soon as sufficient replacement parts are made available. A total of 134,584 units, including 117,758 Elysions, should be recalled.
Dec.11, 2014 Investigative recall of passenger-side airbag inflators*  Following an explosion of a Takata passenger-side inflator case during scrapping work of a Toyota vehicle, Honda decided to recall all the suspect inflators to examine, as a preventive measure. When it cannot provide replacement parts in time, it may temporarily shut down the function of passenger-side airbags.
 A total of 174,006 vehicles including the Fit and the Stream of 2003-2004 model years will be recalled.

Source: Honda's press releases Jun. 23, 2014/Dec. 3, 2014/Dec. 9, 2014/Nov. 11, 2014.
*Note: An inflator case of a Takata passenger-side airbag exploded during scrapping of a Toyota vehicle. Although the cause had not been determined, Toyota recalled a total of 185,093 vehicles including the Corolla as a preventive measure. It is replacing the same type of  inflator of 2002-2003 model years as it could explode, shooting out pieces, catching fire and hurting the occupants during airbag deployment. It aims to identify the cause of the malfunction by investigating the replaced inflators.

 

 



Honda revises FY 2015 sales forecast in Japan down to 930,000 units

 In its financial result announcement for the April to September period in 2014, Honda announced downward revision of its domestic retail sales target for the fiscal year ending in March 2015 (FY 2015) from 1.03 million units to 930,000 units, which is still to be Honda's record high sales in Japan. Affected by a series of recalls, new car launches were delayed and dealers missed opportunities to draw customers.

 Honda plans to release six new models, originally scheduled for launches in FY 2015. In December 2014, it announced the Grace Hybrid Sedan and the N-Box Slash, the fifth model of the N Series. It is anticipated that the new Legend and the Jade minivan with three row seats (supposedly the successor to the Stream) will be released in February 2015, to be followed by the new Stepwgn and the new Fit shuttle.

Honda's retail sales in Japan

FY 2012 FY 2013 FY 2014 Apr.-Nov.
2013
Apr.-Nov.
2014
FY 2015 Forecast
Announced
in Apr.
Announced
in Oct.
Non-mini
Mini
434,918
165,666
354,453
362,344
414,034
434,345
224,950
248,027
267,843
226,029
Total 600,584 716,797 848,379 472,977 493,872 1,030,000 930,000

Source: Honda's monthly releases on production, sales and exports

 

Production in Japan and Exports: FY 2015 domestic production to fall from a year earlier to 900,000 units

 In order to be more competitive in respective markets of the world and to minimize affects of foreign exchange fluctuations, Honda has thoroughly implemented its policy to produce in or near the market, which has reduced the ratio of exports.

 Production of the Fit in Japan for the North American market was transferred to its new plant in Mexico, which commenced manufacturing in February 2014. The export volume in the April-September 2014 period, therefore, dropped to 17,000 units, accounting for only 3.6% of the production volume in Japan. At Honda, sales fluctuations in Japan, therefore, directly affect the production volume in Japan.

 The FY 2015 production in Japan is predicted to total 900,000 units, 30,00 to 40,000 units less than 937,000 units of FY 2014.

Honda's production in Japan and exports

FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 Apr.-Sep.
2013
Apr.-Sep.
2014
Production 901,775 912,307 870,455 876,039 936,879 378,588 468,075
Exports 230,010 310,254 253,060 163,324 97,311 61,380 17,001
Exports/prodution 25.5% 34.0% 29.1% 18.6% 10.4% 16.2% 3.6%

Source: Honda's releases on production, sales and exports
Note: In FY 2007 through FY 2009, Honda exported 570,000 to 700,000 vehicles per year and the ratio of exports was around 50%.

 

 



Honda's 2014 sales in U.S. increases slightly by 1%; recalls' impact on future sales anticipated

 Up to the present, the airbag recall effects are reported to be small on Honda's sales in the U.S. Its 2014 U.S. sales slightly grew by 1.0% to 1.54 million units. The market share slightly dropped y/y from 9.8% to 9.4% since the U.S. Light Vehicle market expanded by 5.9% y/y.

 According to the Automotive News issued on November 3, 2014 and other reports, however, once the nationwide recall details unfold and shortage of replacement parts presents a problem, Honda could face the risk of damage to its brand image.

 

 



Production Forecast by LMC Automotive: Honda production in 2018 to be 5.32 million units

(LMC Automotive、Decmber 2014)

Honda's light vehicle production forecast According to LMC Automotive's forecast in December 2014, Honda Group's light vehicle production in 2018 will be 5.32 million units, up by 24.7% from 2013.

 LMC Automotive foresees, in the long run, a slight reduction of production volume for Honda in Japan, in line with other Japanese carmakers, but the demand for Honda vehicles in China and India will grow significantly. Production in Japan in 2018 will be 803,588 units, down by 4.5% from 2013. By contrast, production in China in 2018 will be 971,530, up by 23.2% from 2013 and production in India in 2018 will be tripled to 374,798 units from the 2013 level.

 Furthermore, production in Indonesia and Mexico will also be increased significantly, up to 297,563 units in Indonesia in 2018, more than four times as many as in 2013 and up to 450,915 units in Mexico in 2018, seven times as many as in 2013.

 LMC Automotive also comments; "Although the Japanese currency has weakened since late 2011, the group is already expanding its overseas production capacity and it is unlikely that production will be shifted back to domestic plants in Japan, at least not in the short term.

Honda Group Light Vehicle Production Forecast(LMC Automotive)

GLOBAL
MAKE
2012 2013 2014 2015 2016 2017 2018
Honda Group Honda 3,930,413 4,108,960 4,253,689 4,467,991 4,645,249 4,898,419 5,058,537
Acura 199,023 158,530 190,627 213,917 219,768 217,440 249,251
Everus 0 0 0 6,064 9,650 11,420 14,114
Total 4,129,436 4,267,490 4,444,316 4,687,972 4,874,667 5,127,279 5,321,902
USA Honda 1,111,895 1,158,056 1,087,557 1,024,310 917,253 924,968 970,429
Acura 107,251 151,856 190,627 213,917 219,768 217,440 249,251
USA sub-total 1,219,146 1,309,912 1,278,184 1,238,227 1,137,021 1,142,408 1,219,680
Japan Honda 1,009,557 841,192 945,520 878,982 795,566 844,563 803,588
Acura 22,855 11 0 0 0 0 0
Japan sub-total 1,032,412 841,203 945,520 878,982 795,566 844,563 803,588
China Honda 622,555 788,689 794,639 784,752 866,262 903,981 957,416
Everus 0 0 0 6,064 9,650 11,420 14,114
China sub-total 622,555 788,689 794,639 790,816 875,912 915,401 971,530
Canada Honda 341,231 401,442 399,058 430,633 431,044 438,213 445,804
Acura 68,917 6,663 0 0 0 0 0
Canada sub-total 410,148 408,105 399,058 430,633 431,044 438,213 445,804
Indonesia Honda 64,261 64,882 168,744 226,198 255,350 276,924 297,563
India Honda 98,084 115,072 168,526 230,722 269,670 335,801 374,798
Mexico Honda 61,813 63,231 145,294 253,826 412,475 451,875 450,915
Thailand Honda 218,345 269,418 134,607 218,935 272,356 286,089 299,918
Brazil Honda 135,389 134,050 129,781 127,365 127,411 133,187 127,914
UK Honda 165,630 138,812 122,613 118,488 108,740 99,841 119,999
Malaysia Honda 29,418 47,954 74,613 90,419 97,466 101,388 103,631
Taiwan Honda 18,532 25,145 25,971 29,500 31,934 33,576 34,000
Pakistan Honda 14,835 23,124 23,028 23,325 24,231 25,735 26,633
Turkey Honda 21,850 14,813 11,775 12,980 14,620 20,800 23,216
Philippines Honda 6,455 7,615 7,980 8,809 9,287 9,677 10,074
Argentina Honda 8,114 11,519 7,248 3,418 5,931 5,775 6,225
Vietnam Honda 2,449 3,946 6,735 5,329 5,653 6,026 6,414
Source: LMC Automotive "Global Automotive Production Forecast (Decmber 2014)"
(Note) 1. Data indicates figures of only small-size vehicles, including passenger cars and light commercial vehicles with gross vehicle weight of under 6 tons.
2. All rights reserved. Reproduction of any data will require permission of LMC Automotive.
3. For more information or inquiries of forecast data, please contact LMC Automotive.

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