Air-Bag Recalls Have Little Impact So Far on Honda Sales

The expanding recall of Takata air bags has so far had limited impact on Honda, the supplier’s largest customer.

Honda first recalled 4,000 Accords and Civics from the 2001 model year in November 2008 to fix air bags that could rupture and spray metal fragments that can injure or even kill drivers or their passengers.

Since then, the recall has expanded to 7.8 million vehicles from 10 automakers, but only vehicles in Florida, South Carolina and Gulf Coast states, as well as Puerto Rico, because the risk of air-bag inflators rupturing is greater in climates of high humidity.

Honda made about 5 million of the vehicles currently under the recall, according to the National Highway Traffic Safety Administration. Honda is Takata’s largest customer in the U.S.

Four deaths in the U.S. and one in Malaysia have been tied to the defective air-bag inflators. Three of those fatal accidents occurred in 2001 Honda Accords. The fourth occurred in a 2002 Acura TL.

On Monday, Rick Schostek, Honda North America executive vice president in Marysville, Ohio, disclosed that the company failed to tell NHTSA of 1,729 cases involving injuries or deaths between July 1, 2003 and June 30, 2014, as required by law.

If this recent news has tarnished Honda’s reputation for quality, new-car buyers aren’t noticing. So far, sales of new Honda and Acura models are rising at about the same rate as the industry. For October, Honda sales rose 5.5 percent from a year earlier, while its luxury brand Acura was up 8 percent. Industry sales increased 6 percent.

“We have a lot of customers asking about the air bags, but because Michigan is not included yet in the recall, we can’t replace them,” said Todd McCallum, operations director for LaFontaine Automotive Group, which owns a Honda dealership in Dearborn, Michigan. “We find that the Honda customer is very loyal to the brand. They seem to be forgiving if something does go wrong.”

NHTSA last week urged Takata and 10 automakers, including Honda, to expand the recall nationwide, but the agency has not yet taken steps to enforce that.

BrandIndex is a tool created by market-research firm YouGov. Among its metrics is something it calls the “buzz score.” This is calculated by asking people whether they have heard anything positive or negative about the brand in the past two weeks, then subtracting negative from positive responses to establish an overall score.

On Sept. 7, Honda’s buzz score was 20. In the latest round of surveys, YouGov spokesman Drew Kerr said that reading slipped to 14.

“That is still above the average for the entire car sector, where the current buzz score is 8,” Kerr said.

BrandIndex also asks consumers, “When you are in the market next to purchase a car, from which of the following brands would you consider purchasing?” The scale ranges from 0 to 100 percent.

Honda dropped from 28 percent in mid-October to 26 percent this past week. But that also is well above the 12 percent average purchase consideration score for all automakers.

Edmunds.com also tracks the percentage of all visitors to its car-shopping website who consider each brand. Over the past five months, Honda’s consideration rate has ranged between 9.5 percent and 11.5 percent, although it has trended downward over the last month.

Acura’s consideration as measured by Edmunds has moved between 3.1 percent and 4.3 percent since June.

Christie Nordhielm, clinical assistant professor of business at the University of Michigan Ross School of Business, said this year’s record number of auto recalls has pushed many consumers into a state of what she calls a “cognitive defensive mode.”

“There have been so many recalls across so many brands that consumer confusion is extremely high,” Nordhielm said. “We don’t want people ignoring recall information, but we don’t want them to get hysterical about every one.”

Those who follow media coverage of Takata’s recall notice that most of the fatal accidents have occurred in models that are more than a decade old. The other factor that has worked in favor of a variety of companies that experienced crises is that most Americans have short memories.

This article appeared in print in the November 27th, 2014 edition of Hamodia.