Honda Motor Company and Takata Airbag Crisis

Subject: Case Studies
Pages: 2
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At the beginning of 2017, Takata pleaded guilty to installing defective airbags and agreed to pay a fine of $ 1 billion in the United States. In total, US regulators have demanded the recall of more than 100 million cars (Paukner, 2020). The situation affected two dozen automakers, including the Japanese concern Honda, with which Takata appeared before Congress.

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Honda successfully handled its testimony before Congress, agreeing to recall lots of cars with defective airbags. The manufacturers confirmed that the cause of the accident was a faulty airbag inflator. Representatives of the Japanese concern expressed their readiness to bear responsibility for the incident and stop cooperation with Takata. The speech of Takata representatives was less successful: a strategy was chosen to deny the insecurity of airbags. The company’s mistake was an attempt to shift the blame to car users and a combination of exceptional circumstances: for example, extremely high temperatures or high humidity. The US Department of Justice conducted an investigation, according to the results of an unnamed top manager of Takata was convicted of manipulating the results of internal tests.

The most critical problems facing Honda were related to the upcoming recall of cars. This included launching an effective campaign, compiling a list of car models, and the potential need for its further expansion. Then the Japanese automaker was faced with large cash payments to settle lawsuits from US citizens who suffered due to defective Takata airbags (Bahety et al., 2018). In addition, another problem that arose as a result of the scandal was the decline in the price of Honda shares.

Honda’s primary stakeholders are the company’s executive vice president and the National Highway Traffic Safety Administration. The executive vice president of Honda was interested in restoring the company’s reputation to avoid losses resulting from image losses. NHTSA is interested in taking concrete measures aimed at reducing the accident rates on the roads. The need for communication of both stakeholders was due to discuss an effective strategy to improve the safety of the mass use of Honda cars.

Honda should demand financial compensation from Takata because the company’s managers knew about the defects in the airbag. In turn, Takata must finance Honda’s losses and payments to the affected citizens. The leaders of the Takata company consciously went to the use of life-threatening materials, wanting to save on components. That is why they should fully bear responsibility for the incidents with the airbag inflators. Manufacturers of a defective airbag should be required to cover the total cost of its replacement; the same model would likely work for other auto manufacturers.

Since Rick Schostek, executive vice president of Honda North America, testified before the Subcommittee, the public has imbued confidence in him; therefore, he should announce a recall. All models of cars in which Takata airbags are installed must be recalled. The should must be conducted by calling the owners of cars of these models and notifying them of potential danger.

The owners of cars purchased not from Honda official dealers, who do not have a warranty for car maintenance, will not fall under the recall. Honda representatives should statistically justify the danger of faulty airbags in the message, which can cause the death of motorists. Nevertheless, Honda should convey the message that they remove responsibility for road accidents caused by the carelessness of drivers who refused the repairs offered by the manufacturers. The message should be communicated both in the media and by phone and e-mail to each driver personally.

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At the moment, Takata has been declared bankrupt, which put an end to new lawsuits, so from now on, the only way out for the owners is to sue the automakers. The bankruptcy did not save the Takata officials from responsibility, who resigned in full. They were criminally responsible for the destruction of test data of deadly airbags.

References

Bahety, S., Moffit, B., Pruchnik, W., & O’Rourke, J. (2018). Honda Motor Company: Communication and the Takata airbag crisis. The Eugene D. Fanning Center for Business Communication. South Bend, IN: University of Notre Dame.

Paukner, M. (2020). Wisconsin, 47 others reach $85 million settlement with Honda over faulty airbags. Wisconsin Law Journal, 18(5), 32-46.