By Ryan Beene, Crain News Service
WASHINGTON (Nov. 25, 2014) — American Honda Motor Co. inc. failed to tell U.S. safety regulators about more than 1,700 claims of deaths or injuries linked to possible safety defects in its vehicles since 2003, when the U.S. law requiring the reports took effect, the auto maker said Nov. 24.
The 1,729 incidents involve a wide variety of possible safety defects, including eight incidents linked to defective Takata Corp.-manufactured airbag inflators.
The reporting errors were caused by a series of data entry and computer programming errors, plus an “overly narrow interpretation” of the Transportation Recall Enhancement, Accountability and Documentation Act (TREAD), Honda said.
The TREAD Act, the 2000 legislation that overhauled auto recall procedures after the Ford-Firestone tire crisis, requires auto makers to submit quarterly reports to the National Highway Traffic Safety Administration (NHTSA) listing all known incidents of deaths or injuries that may be linked to safety defects in its vehicles.
Honda's violation is one of the biggest in history and could lead to a fine of $35 million.
NHTSA is reviewing Honda's report as part of an investigation into the company's failure to report airbag related deaths and injuries in a timely manner, said Kevin Vincent, the agency's chief counsel. There's no timetable for an agency decision, he said in a statement.
“We received Honda's response to our Special Order and will immediately begin reviewing the documents as part of our ongoing investigation,” Mr. Vincent said.
Honda said eight of the 1,729 cases involved Takata airbag inflator ruptures and that NHTSA knew of those incidents.
“I think absolutely they are going to get a $35 million fine,” Joan Claybrook, a former NHTSA administrator who now advocates for consumer safety, told Bloomberg News. “It's quite shocking Honda would behave this way. They've put their company reputation at risk.”
Auto makers face fines of $7,000 per violation per day for not abiding by the TREAD Act, which requires the companies to tell regulators about customer injuries, lawsuits, warranty claims and complaints. If Honda's admitted lapses — spanning from July 1, 2003, to June 30, 2014 — average at least three days each, the auto maker would actually exceed the law's $35 million maximum civil penalty.
“It is certainly possible that Honda's cooperation and proactive efforts, and agreement to institute certain changes, will mitigate the magnitude of this fine,” said Neil Steinkamp, a managing director at Stout Risius Ross who studies warranty and recall issues. “More importantly, this is likely to serve as a significant warning to other auto makers.”
The largest fine NHTSA has levied for lack of compliance with its “early-warning reporting” system was a $3.5 million penalty last month against Ferrari S.p.A. for failing to file information on alleged defects and three deaths.
Honda's findings come from a third-party audit into its death and injury reporting practices that the company commissioned in September when it learned of possible shortcomings in how it reports such claims to regulators.