Honda Motor Company, Ltd. (HMC) is facing a major setback as its shares decline premarket on Wednesday. This comes after the National Highway Traffic Safety Administration (NHTSA) revealed a recall affecting approximately 1.7 million vehicles.
The recall stems from a manufacturing defect in the steering gearbox worm wheel. Honda’s filing with NHTSA details that the worm wheel can swell during operation, thinning the grease film between the worm wheel and worm gear. This issue is compounded by the worm gear’s spring preload being set too high, resulting in increased sliding force between the components.
The combination of reduced grease film thickness and heightened sliding force leads to significant friction between the worm wheel and worm gear. This increased friction can make steering more difficult and require more effort, potentially increasing the risk of an accident or injury.
Several popular Honda models are affected by the recall, including the Honda Civic 4D, Honda CR-V, and Honda CR-V Fuel Cell Electric Vehicle, spanning model years 2022 to 2025. This recall follows a previous recall of 750,114 vehicles in February 2024 due to airbag concerns, although no injuries have been reported. Last year, Honda also recalled 100,000 hybrid vehicles in the U.S. due to fire risks.
Investors looking to gain exposure to Honda can consider the SPDR S&P Kensho Smart Mobility ETF (HAIL).
As of Wednesday’s premarket trading, HMC shares are down 1.72% at $31.44.
