U.S. fines Honda record $70 million for safety lapses

David Shepardson
Detroit News Washington Bureau

Washington — Honda Motor Co. has agreed to pay a $70 million fine for failing to disclose more than 1,700 reports of deaths, injuries and other "early warning" information to the National Highway Traffic Safety Administration over more than a decade — the largest auto safety fine in U.S. history.

The Japanese automaker initially admitted in November it violated two sections of a 2000 federal law that requires automakers to disclose reports to the National Highway Traffic Safety Administration. The company has agreed to pay the maximum $35 million fine allowable under each section as part of a consent agreement for failing to turn over different types of reports.

"We're talking about 11 years — 11 years of information we did not have — and it is egregious," Transportation Secretary Anthony Foxx. He said it didn't matter why Honda failed to follow the law. "Good intentions don't help the automaker," Foxx said, saying NHTSA is taking a "very aggressive posture."

Foxx said NHTSA has asked all automakers to audit their early warning reporting systems to make sure they are in compliance with the reporting law.

"We have to continue to do better on our end but we sure want to send a signal verly clearly to the industry that they have an end to this responsiblity to take on as well," Foxx said.

Sens. Richard Blumental, D-Conn., and Ed Markey, D-Mass., said in a joint statement NHTSA's record fine sends "a warning signal to all auto companies that they should take their safety reporting system into the shop for a tune-up. Reforms are still urgently needed to hold car companies accountable and provide more information to the public so they can be protected from fatal vehicle defects."

The fine marks the latest step by the agency to take a tougher line with automakers. Automakers recalled more than 63.5 million vehicles in 2014 — more than twice the previous record set in 2004.

NHTSA in May fined General Motors Co, $35 million for delaying a recall of 2.6 million vehicles linked to at least 42 deaths and 58 injuries. Overall in 2014, the agency imposed $126 million in fines — more than it issued in total in NHTSA's 40-year history.

New NHTSA Administrator Mark Rosekind said it is unclear how many deaths are involved in the 1,700 complaints because NHTSA is still reviewing the data and Honda has until the end of February to submit all claims. "We need the safety data ... to determine if there are defects that need recall action," Rosekind said. "That's exactly why this information is so critical for us to have."

Congress this year is expected to take up sweeping auto safety legislation amid rising concerns about auto safety and the Obama administration sweeping reforms.

President Barack Obama told The Detroit News earlier this week that he was concerned about the jump in recalls and safety problems. He said he wants NHTSA "to work with the auto companies to catch problems early." He automakers should understand they are being "penny wise and pound foolish not catching these problems on the front end."

Honda said it was making improvements.

"We have resolved this matter and will move forward to build on the important actions Honda has already taken to address our past shortcomings in early warning reporting," said Rick Schostek, executive vice president, Honda North America Inc. "We continue to fully cooperate with NHTSA to achieve greater transparency and to further enhance our reporting."

In November, Honda disclosed that since 2003 it had made a series of significant mistakes in failing to report more than 1,700 incidents. It came under harsh criticism in Congress. Honda blamed a faulty computer program and inadvertent data entry and coding errors as reasons for failing to report problems, but the automaker also said it didn't do enough to fix the problem. After reports first surfaced that Honda hadn't complied with reporting requirements, it commissioned an audit in September to determine how often and why it failed to comply with requirements.

The reporting requirements are designed to help the auto safety agency spot safety trends earlier. They are required under the TREAD Act, which Congress approved after 270 reported deaths in Ford SUVs were linked to faulty Firestone tires.

Under the consent agreement, Honda must for at least a year submit reports to NHTSA every 60 days updating the agency on its creation and implementation of new written procedures. Honda must submit information on all prior incidents to update NHTSA's early warning database with its missing death-and-injury reports.

Honda must also submit all missing property damage claims, consumer complaints, warranty claims and field reports that were excluded from its quarterly reports. The automaker is conducting a complete accounting to ensure that all incidents have been discovered beyond the 1,700 identified.

One year after the agreement is in effect, Honda must submit to an independent third-party audit of its reporting system and submit the results to NHTSA.

Honda's recall system has had other problems. Honda said in November its recall look-up system was making mistakes and that a Florida dealer failed to repair a woman's Civic that had been recalled for Takata air bags that later ruptured in her face, causing serious injuries.

The fine follows intense scrutiny Honda has faced in the wake of at least five deaths from faulty air bags — including four in the United States. Honda recalled more than 9 million vehicles in seven separate campaigns since 2008 for defective Takata Corp. air bags; inflators can explode and send metal fragments flying at passengers and drivers.

Honda in December under NHTSA agreed to recall another 3 million vehicles in the United States nationwide for driver-side air bags expanding a regional recall. Four other automakers followed suit in the following weeks.

In total, 10 automakers have now recalled more than 14.5 million vehicles with Takata air bags since 2013. The automakers met in December in Romulus to discuss hiring an outside engineering firm for independent testing — and have another meeting set for next week. NHTSA also has hired an outside firm for testing.

Congress praised the move but wants more.

"Seventy million dollars is a start," said U.S. Sen. Bill Nelson, D-Fla. "But we still need automakers to step up and take care of consumers with defective airbags, and we need regulators to insist on more timely and accurate reporting of possible safety defects."

Clarence Ditlow, director of the Center for Auto Safety, who has called for a criminal probe, said Thursday the quick settlement was a sign of companies responding to the threat of tough action. "When faced with the possibility of a criminal investigation, corporations say 'How big should the check be?' " Ditlow said.

The NHTSA consent order doesn't bar the Justice Department from pursuing a criminal case. Foxx said the department has shared information about Honda's reporting failures with the Justice Department, but it is up to the Justice Department to decide whether to open a criminal investigation.

Subaru recalls 199K vehicles to fix brake line rust

Subaru of America is recalling 198,900 previously recalled vehicles in 20 cold-weather U.S. states because of possible rust on brake lines caused by road salt.

The unit of Fuji Heavy Industries Ltd. said it will recall the 2009-13 Forester, 2008-11 Impreza, 2008-14 WRX and 2008-14 WRX STI in 20 states — including Michigan — and the District of Columbia. The company said the second recall is because incomplete repair instructions to dealers should have said that additional anti-corrosion material needs to be applied to the four-way joint connector area of the brake line system.

The original recall issued in June applied to 461,338 vehicles. That was prompted by a lengthy investigation that began in 2011 after reports of rusty brake lines. Subaru notified the National Highway Traffic Safety Administration of the new recall Dec. 31; it was made public Thursday.

The new recall applies to owners who had them repaired before Dec. 23 under the earlier recall. Subaru's all-wheel drive vehicles are often favored in cold-weather states.

David Shepardson