Honda has cut the pay of its chief executive Takanobu Ito by 20 per cent following the fifth recall of its Fit hybrid model in a year due to safety issues.
The Japanese carmaker announced the move on Thursday after it said it was recalling about 426,000 more vehicles – mostly in Japan – to address defects in ignition coils and electrical circuits. Affected models include the hybrid and petrol versions of the Fit subcompact model.
Carmakers and regulators across the globe have come under increasing pressure to accelerate their response to safety issues after incidents where they were later found to have been tardy in addressing defects.
While Japanese companies often dock pay for poor financial results, as in the case of Sony and Nintendo executives earlier this year, pay cuts as a penalty for recalls are unusual.
Executives at Mitsubishi Motors and its former truck unit took pay cuts after massive recalls and cover-ups of defects in the early 2000s, although Toyota, even as it grappled with significant recalls of its Prius and other models in 2009 and 2010, did not dock executives’ pay.
Honda said a total of 13 executives including the chief executive would have their pay reduced by 10-20 per cent for three months starting next month, and apologised for making customers visit dealers multiple times to fix problems.
The combined cost linked to the five recalls is about Y16.5b ($153m), including Y5.7b for the latest one.
The carmaker also appointed a new executive to oversee quality after repeated trouble with the redesigned Fit hybrid, which was launched in September last year. Earlier recalls were linked to software glitches in the transmission system and the engine control unit. Honda said no injuries have resulted from any of the Fit vehicle defects.
Separately, domestic rival Nissan on Thursday recalled another 260,000 vehicles to fix defective airbags manufactured by Japan’s Takata. The carmaker has already recalled 1.3m vehicles in connection with the Takata airbag trouble, but says it has not received any reports of injuries or deaths.
Nissan’s expanded recall followed a series of statements from US car safety regulators this week urging car owners to “act immediately” to have the airbags fixed.
According to the US National Highway Traffic Safety Administration, the airbag problems potentially affect at least 7.8m units from 10 car companies including six Japanese carmakers, BMW, Chrysler, Ford and General Motors.
Honda has the largest number of affected vehicles at 5m followed by Toyota with 877,000.
Takata, the world’s second-largest airbag maker after Sweden’s Autoliv, has said the front passenger airbag inflators could rupture and spray metal shrapnel in the event of an accident. It has said defective airbags are linked to at least two deaths in the US involving drivers of Honda vehicles, and that two other deaths are being investigated.
In a statement early on Thursday, Takata reiterated that repair costs are mostly accounted for in reserves set aside in the first quarter, and that it expected any additional new costs to be minimal.
The company said it was not aware of an investigation by US federal prosecutors – reported by The Wall Street Journal – into whether Takata made misleading statements to regulators about the safety of its airbags.
Shares in Takata, already down 44 per cent for the year, fell another 6.2 per cent on Thursday in Tokyo.
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