Honda Down On Takata's Alleged Alteration Of Airbag Test Data

Honda Motor Co., Ltd.’s (NYSE:HMC) share price fell 0.64% on Jul 19, after an audit revealed that Takata Corp. was manipulating test results of airbag inflators it was supplying to the automaker. The audit started in Oct 2015 and its initial stage focused on airbag inflators that were not covered by recalls as of that date.

Brian O'Neill, the former president of the Insurance Institute for Highway Safety spearheaded the audit. Per Bloomberg, the audit revealed that Takata had often eliminated certain test results to show lesser inconsistency in the performance of its inflators. However, the results did not identify any risk in vehicles that had not been recalled when the audit started. Full results of the initial phase of the audit are expected to be available soon.

The defective Takata airbags have resulted in multiple recalls by automakers. When these inflators explode, they send metal fragments shooting into the car that may injure or kill occupants. This has resulted in 11 confirmed deaths and more than 100 injuries. Another 3 deaths in Malaysia are still under investigation for possible links to these airbags.

Recently, the National Highway Traffic Safety Administration (NHTSA) declared nearly 313,000 Honda vehicles to be risky to drive due to unrepaired defective Takata airbags. New tests had revealed that the airbag inflators of some Honda and Acura vehicles manufactured over the period 2001−2003 have up to 50% chance of exploding while inflating. Hence, the NHTSA has advised owners to stop driving these vehicles and bring them in for repairs as soon as possible.

HONDA MOTOR Price

Honda currently carries a Zacks Rank #3 (Hold). Some better-ranked automobile stocks include Commercial Vehicle Group Inc. (NASDAQ:CVGI) , Spartan Motors Inc. (NASDAQ:SPAR) and U.S. Auto Parts Network, Inc. (NASDAQ:PRTS) , all carrying a Zacks Rank #2 (Buy).