Honda recalls another 438,000 cars for airbag risk

The move follows a separate recall of 646,000 cars less than two weeks ago for a faulty window switch that engulfed a Jazz subcompact in flames in South Africa, killing a child.

Japan's No.2 automaker had previously filed recalls for the airbag problem on two separate occasions, in November 2008 and June 2009, covering a total 510,000 vehicles.

Ongoing investigation had determined the defect was caused by insufficient stamping pressure during the production of the inflator propellant and not by excessive moisture intake by the propellant as previously believed, Honda said.

The airbags are made by the U.S. unit of Japan's Takata Corp, a Honda spokesman said. A Takata spokesman said the company was not aware of any defect in airbags it supplies to other automakers.

The expanded recall is concentrated in the United States, where nearly 379,000 cars are subject to the recall. All cars to be recalled globally are made at Honda's U.S. and Canadian plants. The latest recall applies to 2001 and 2002 model-year Accord, Civic, Odyssey, CR-V, Pilot and 2002 Acura TL and CL vehicles in the United States.

The Honda spokesman said the recall would cost the company about 24 million yen ($267,000) in Japan, or about $67 a car. He declined to disclose a global estimate, but based on the per-unit cost in Japan, the global tally would come to about $30 million.

The airbag defect has been linked to one fatality and 11 injuries in the United States. There have been no reports of accidents elsewhere, Honda said.

The move comes at a time when Honda's bigger rival Toyota Motor Corp has come under intense scrutiny from U.S. safety regulators. Toyota has launched the biggest recall in its history and faces criticism that it was slow to respond to safety issues.

Honda said it had brought the safety issue to the attention of the U.S. National Highway Traffic Safety Administration and had notified regulators of the decision to include additional vehicles in its recall.

The NHTSA contacted Honda in August 2009 as part of a review into whether the automaker had acted in a timely way in announcing its broadened recall.

John Mendel, Honda's U.S. chief, told reporters on a conference call that the NHTSA review had not been concluded.

Shares of Honda were down 0.2 percent on Wednesday afternoon in Tokyo, underperforming gains in most other auto stocks and the broader market. The Nikkei share average rose 1 percent.

Takata shares fell 1.6 percent.

But analysts noted that automakers regularly make recalls, and said media coverage of recent cases had been somewhat overblown.

While the way automakers handle recalls is important, I think people should be careful not to overreact to every single recall, said Yoshihiko Tabei, chief analyst at Kazaka Securities in Tokyo.

Rather, my concern for the auto industry is their earnings for the next financial year, given the absence of the boost they enjoyed from government incentives this year, he said.

Honda last week lifted its annual guidance far beyond market expectations.

($1=89.91 Yen)

(Additional reporting by Taiga Uranaka; Editing by Chris Gallagher)