Airbag Recall – Update on Progress for Resolution

Progress is slow! Takata are still trying to find the origination of the defect that causes the airbag assembly to spew out shards of metal that can injure or kill drivers or their passengers. Interestingly, BMW was quoted as saying that they had switched their airbag orders to a Takata facility in Germany where they are also made. The offending factory is in Mexico. One simple question to ask is: “how can the airbags be made in another facility with no quality issues?” Then a series of questions cascade from the answer, namely what do they do that is different and why can’t the same procedures be applied in Mexico?

There is a concern that the issues surrounding this current recall and the need to find the source could cripple the company. Two companies have expressed their support for Takata. Sumitomo Mitsui Financial Group who have a stake in the component maker have pledged their support to keep the business running if the cash starts to run out.

The other supporter is Honda, who not only have been hit the hardest with the recall, but also own a small chunk of the supplier and therefore have a vested interest in keeping them afloat. At a recent conference in Tokyo where Honda discussed their own need to improve quality, the head of Takata, Shigehisa Takada, attended and held a small press conference of his own to discuss the progress. The conference was between Honda and its main suppliers to discuss the improvements needed in design and manufacturing, not only with the suppliers but also at their own factories where the cars are assembled. Better quality auditing and testing is required as cars come off the production line and after defects are found.

Whilst the conference was in progress, the National Highway Traffic Safety Administration (NHTSA) in the US fined Honda a record $70M in fines for under-reporting injuries or fatalities with their cars over an 11 year period. The penalty was actually two separate $35M fines and related to other product defects not just the Takata airbag recall. One of the fines covers the failure to report over 1,700 fatalities over a 10 year period – the reported number was significantly lower. The other fine related to the inability of Honda to record and retain accurate records of warranty repairs and claims. This second one was felt to interfere with the NHTSA’s ability to assess the severity of a defect.

Both fines are the maximum allowed under US law and some industry associations are still demanding a criminal law suit. In addition to the fines, Honda will have to have external audits, show it has improved staff education and shown that has improved its regulatory compliance. Part of the admission by Honda was that it had “inadvertent data entry and computer errors”, so retraining the staff to record defects correctly and having a computer that can report efficiently will be high on the resolution list!

Interestingly, Honda was prosecuted for not sharing police reports from accidents. I would have thought that every accident that has an injury or fatality would have a police report written and this report would automatically go to the NHTSA for analysis. The Administration can then collate all accidents from every police jurisdiction and build a picture quite quickly of potential issues with a particular model of vehicle.

One concern I have on recalls is the responsibility of the dealer network. The manufacturer doesn’t deal directly with the owner, there is an intermediary namely a franchised dealer who sells and hopefully maintains the vehicle. If they do not provide accurate records back to the manufacturer, then any new compliance process with immediately fail. This means that the dealer network must be involved and penalties applied to them if they fail to record defects accurately.

My experience with this has been with several dealers of differing manufacturers whose service staff weren’t able to assess a problem. One was Honda – for many years I owned an S2000 that I bought new in 2000 and had several recalls, one of which was to replace the clutch with a stronger design. After a few months, when I took it in for a regular service I commented that the gearbox was noisy (like a rally car!) as if it had no oil in the box. The dealer said it was normal. This situation was repeated for several services when I had the gearbox oil changed and tried other fixes. Finally they split the gearbox and found the oil pump impeller was bent and jammed so no oil was flowing through the box. The dealer put in a successful warranty claim, however I felt that this problem was caused by the dealer themselves when they were dealing with the clutch warranty work and was not a design or manufacturing issue.

In this day and age of compliance and legal outcomes, it is very important for the manufacturers to connect closer to their dealer networks and ensure that the improvements made flow down through this channel as well as through to the suppliers.