The logo of Honda Motor Co. and an airbag logo on a steering wheel of a car. Photo: Issei Kato/Reuters

Honda Motor Co. is likely to post its best July-September profit since the global financial crisis, but a slew of vehicle recalls threatens to delay the rollout of new models, crimping domestic market sales growth.

Japan’s third-biggest car maker last week apologised for a fifth domestic recall of its Fit hybrid subcompact, prompting a pay cut for CEO Takanobu Ito and a dozen executives. Honda said it would re-examine its process for developing cars, a move that could delay their debuts.

The Fit recalls come on top of more than 5 million cars that Honda has called back in the United States over unrelated issues with Takata Corp’s potentially defective airbags that have been linked to four deaths in Honda’s single-biggest market.

Honda first recalled the Fit hybrid in October 2013, just a month after its launch, for defective controls on a newly developed transmission system. The latest recall was to fix noise-related glitches unrelated to the transmission. To date, Honda has recalled 163,885 Fit hybrid vehicles in Japan.

The series of Fit recalls has so far cost 16.5 billion yen (€120 million), though Honda sees minimal impact on its earnings – due today. July-September operating profit is forecast to rise just over 7 per cent to 184.1 billion yen, according to the average of 14 analysts polled by Thomson Reuters.

The Fit recalls could delay other vehicles designed to use the new transmission, said Koji Endo, autos analyst at Advanced Research Japan. Analysts expect the recalls and potential development delays to slow Honda’s domestic sales, which the company hopes to push up to a record 990,000 cars in the year to next March.

The Nikkei business daily reported yesterday that aggregate domestic sales at Japan’s eight car makers would drop below 5 million cars for the first time in two years, with Honda seen selling 950,000 cars. Another drag on Honda’s earnings could be a slowdown in high-margin motorcycle sales in Southeast Asia.

“The only bright spot for Honda is the weak yen,” Endo said. “There’s not that much confidence in their three main markets – the US, China and Japan. Frankly, Honda’s earnings are going to be a little scary.”

The dollar has risen to 108 yen, while Honda is assuming an average 101 yen for the year.

Clouding the outlook further for Honda is the risk of more Takata-related recalls in the US, where there is some political pressure to expand a regional recall nationwide.

Recalls so far have focused on areas where hot, humid weather may damage the propellant that triggers the airbag in the event of a collision.

Expanding the recalls nationwide would mean an additional 5.3 million cars to fix for various automakers, including Honda, according to Reuters’ calculations based on data from automakers and the US National Highway Transportation Safety Administration (NHTSA).