Coverage: Another auto company under fire

General Motors is likely celebrating that the headlines aren’t about them or vehicle recalls. Instead, Honda Motor Co. is being fined a record $70 million for underreporting deaths and injuries related to its cars.

Jeff Plungis had this story for Bloomberg:

Honda Motor Co. (7267) agreed to pay a record $70 million in fines and submit to stricter oversight for failing to tell the U.S. government about warranty claims and more than 1,700 injuries and deaths linked to potential defects in its cars.

Automakers are required to report such information under a 14-year-old U.S. law, and Honda’s violations may have hampered the National Highway Traffic Safety Administration’s ability to quickly identify vehicle flaws.

“Honda and all of the automakers have a safety responsibility they must live up to — no excuses,” U.S. Transportation Secretary Anthony Foxx said in a statement today. “These fines reflect the tough stance we will take against those who violate the law.”

Honda’s violations came to light late last year as investigations into a global crisis over defective air bags cast doubt on the diligence of some automakers to tell the government about all potential product defects. In a synopsis of an internal review filed with NHTSA in November, the Tokyo-based automaker blamed its underreporting on “inadvertent data entry or computer programming errors” that spanned 11 years.

The Washington Post story by Ashley Halsey III said the fines came after a record year for recalls and other issues in the auto industry:

The fine signals that recalls and penalties against automakers that set records in 2014 will continue in the new year. More than 60 million vehicles were recalled last year, nearly double the previous record, set in 2004, and manufacturers faced an unprecedented $126 million in fines.

Honda, which blamed the underreporting on “inadvertent data entry or computer programming errors,” faced fines of $7,000 per day for each violation, a maximum civil penalty of $35 million for failure to report the deaths and injuries. It was fined another $35 million for failing to report warranty claims to federal regulators.

But the fines aren’t the only issue that Honda is working to solve, USA Today’s Chris Woodyard pointed out:

The two fines do not directly relate to the scandal over automotive air bags made by Japan’s Takata. Honda has been at the center of the issue involving air bags that can injure or kill passengers when they deploy, along with nine other automakers. But Honda has said the audit total includes eight Takata air bag failures involving one death and seven injuries. It says NHTSA already was informed of these incidents through other channels.

The fines show NHTSA, an agency under the Transportation Department, is getting tougher on automakers, officials say.

“Honda and all of the automakers have a safety responsibility they must live up to, (which is) no excuses,” said U.S. Transportation Secretary Anthony Foxx in a statement.

In a statement Thursday, Honda said it is moving ahead after the fines.

“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,” says Rick Schostek, executive vice president for Honda North America, in a statement. “We continue to fully cooperate with NHTSA to achieve greater transparency and to further enhance our reporting practices.”

The New York Times story by Danielle Ivory noted that the NHTSA has also come under harsh criticism in the recent past:

The auto safety agency has had a difficult past year. Last year brought record vehicle recalls and intense scrutiny from lawmakers, safety experts and the news media. A New York Times investigation into the agency’s handling of major safety defects over the last decade found that it often had been slow to identify problems, tentative to act and reluctant to use its full legal arsenal against automakers.

Mr. Rosekind, a former member of the National Transportation Safety Board, was confirmed as the agency’s administrator in December, almost a year after the resignation of David L. Strickland as the agency’s leader. David J. Friedman led the agency in the interim and took much of the heat aimed at its work during a series of congressional hearings last year that focused on the ever-expanding recalls of Takata-made airbags and faulty ignition switches, which General Motors failed to disclose for more than a decade.

This week, Mr. Rosekind said that the safety regulator was overhauling its recall infrastructure to see how it could be improved and said he wanted more resources, including additional workers, for the agency.

“This is an agency that is so under-resourced,” he said. “It’s more severe than I realized from the outside.”

The auto industry has suffered some recent public relations set backs, but it definitely has one bonus – most people need cars. That doesn’t mean they’re rushing out to buy new ones and that the news won’t hurt sales, but since people ultimately replace and trade their vehicles, there will always be a market. That’s lucky for many automakers given their recent public disclosures.