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Honda Includes California in Takata Airbag Recall

Zacks Equity Research

Honda Motor Co., Ltd. (HMC) announced the inclusion of California in the states where it is recalling vehicles with faulty Takata-made airbag inflators. The inflators can explode and shoot metal shrapnel at the occupants of the vehicle, thus injuring them. Notably, California is one of the biggest auto markets in U.S.

The National Highway Traffic Safety Administration (:NHTSA) will be investigating the exact cause of the recall. However, Honda did not reveal the accurate number of vehicles being recalled.  The recalled vehicles include Accords of model years 2001-2007, 2001-2005 Civic and 2002-2006 CR-V.

Honda is also recalling vehicles from Alabama, Georgia, Louisiana, Mississippi, South Carolina and Texas for the airbag issue. With the inclusion of California, Honda has ventured into the populated states and major markets of automakers in the U.S. In addition, it is expected that other automakers will expand their area of recall coverage.

In June, Honda recalled 2.03 million vehicles globally, of which 1.02 million are from North America and nearly 669,000 from Japan, due to faulty Takata-made airbag inflators. The recalled vehicles include Civics, CR-Vs, Odysseys and Elements manufactured between 2000 and 2005. The Japanese automaker recalled nearly 1 million vehicles for the same problem last year.

In June this year, automakers including Toyota Motor Corp. (TM), Honda, Mazda Motor Corp. (MZDAY) and Nissan Motor Co. Ltd. (NSANY) announced the recall of vehicles due to the faulty Takata airbag inflators. All these automakers, along with BMW, had recalled 3.6 million vehicles with defective Takata airbags last year as well. The recalled vehicles were from Puerto Rico, Florida, Hawaii and the Virgin Islands, which are high humidity regions in the U.S.

Over the last 5 years, auto manufacturers have recalled a total of 10.6 million vehicles globally due to faulty air bags produced by Takata, excluding the U.S. regional recall. Out of these, Honda itself has recalled more than 6 million vehicles. Furthermore, there have been reports of 2 fatal accidents by Honda Accord caused by the faulty airbags.

Currently, Honda carries a Zacks Rank #5 (Strong Sell).

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