Air-bag supplier Takata Corp's biggest customer Honda Motor Co has reported that they have missed their profit forecasts costly recalls for replacement devices expand.
The company has reported a net income of 124.2 billion yen ($1 billion) in the last quarter of last year. This figure is compared with the 149.3-billion-yen average from eight analysts. However, despite its failure to meet the expected profit, the automaker is still positive that its profit will rise to 525 billion yen for the fiscal year ending in March.
The missed target is said to be partly caused by Honda calling back more than 20 million vehicles to fix Takata-made air bags. The malfunction of the air bags has been linked to 10 deaths and at least 100 injuries of motorists in the USA alone.
"Although there are signs of improvement in earnings, the uncertainty over the quality issue cannot be wiped out," Takaki Nakanishi, an analyst at Jefferies Group LLC, wrote. "Future prospects of Takata-related costs remain unclear."
Honda and other automakers, including Toyota Motor Corp, have met with Takata last Friday to discuss the state of its business. Unfortunately, representatives of the different companies have all declined to discuss details.
Takata, Honda and a number of other automaker companies have joined forces in terms of investigating the root cause of the air bag ruptures. "Those efforts will determine how much Takata will contribute to paying recalls that have already cost automakers 600 billion yen to 700 billion yen, a person familiar with the matter said earlier this week."
The situation has caused frustrations not only from the automakers themselves but also from car owners. It has been eight years since Honda has begun to recall vehicles with defective air bags in 2008.
The longer it is for the investigation to come up with results and conclusions, the costlier it would be for Honda, especially that an 11th death involving the malfunction of its inflators have been reported just within the week.
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