Honda may pay $35 million in penalties because it failed to report important safety information to the National Highway Traffic Safety Administration (NHTSA).
Pursuant to the TREAD Act reporting requirements (also known as Early Warning Reports, or EWRs), vehicle manufacturers must issue quarterly reports containing information regarding potential safety issues. A portion of each TREAD Act report must list known claims or notices made in writing that assert that a death or injury was allegedly caused by a possible defect with the vehicle. In the report, car makers must also include information regarding warranty claims, property damage claims, customer complaints, and other filed reports.
Findings from a third-party audit reveal that Honda failed to report 1,729 written claims or notices regarding injuries or deaths for more than a decade - from July 1, 2003 through June 30, 2014. In addition, once Honda became aware of the possible underreporting to the NHTSA, there was a delay in the company initiating an investigation and reporting the accurate information.
Eight of the 1,729 claims or notices Honda failed to report to NHTSA involved Takata airbag inflator ruptures. Takata is a Japanese parts supplier that recently recalled 14 million airbags because the inflator may cause the airbag to overinflate and rupture, which may release lethal shrapnel into the vehicle. Some Honda vehicles include Takata airbags including:
In accordance with the TREAD Act, Honda was required to report incidents like the Takata airbag inflator rupture to NHTSA as warranty or property damage claims. Honda stated that it reported regular warranty claims in accordance with the TREAD Act. However, the third-party review determined that Honda incorrectly reported special warranty claims. In addition, Honda did not report all property damage claims as required by NHTSA regulations, but instead only reported property damage claims that it had denied, and incorrectly reported the accepted property damage claims as warranty claims.
Honda attributes the majority of reporting issues to a system error in the recording of a verbal data code in its legal file management system. A Honda employee inquired about the system error in 2011, but it was not until September 2014 that Honda took direct action by initiating a third-party audit to investigate the extent of their underreporting. In addition to Honda’s delayed investigation, the automaker also failed to notify NHTSA until October 2014, although NHTSA had warned Honda in January 2012 that there were underreporting issues.
Honda stated it has corrected the system error that allegedly caused the reporting issue, and has implemented a number of steps to prevent any future reporting errors.