The tally rises to 36 MILLION cars recalled due to the Takata Airbag Scandal, when will it end ?

The global Takata airbag recall expanded by millions more vehicles for the second time in as many days today, with Honda Motor Co. and Daihatsu calling back more inflators.

The latest recalls affect some 4.89 million vehicles at Honda and about 260,000 at Daihatsu, the mini vehicle subsidiary of Toyota Motor Corp. The safety campaigns came just a day after Toyota and Nissan Motor Co. announced a similar recall of more than 6.5 million cars globally.

The Honda recall doesn’t affect vehicles in the United States or Canada. Vehicles sold in those markets weren’t equipped with the possibly faulty inflators targeted in the latest action.

Honda’s recall covers 1.72 million vehicles in Japan that were manufactured from 2002 to 2008. Those 17 nameplates were made in Japan, Thailand and the United States. The remainder of the recalls falls in other regions. Honda said it will announce the regional breakdowns locally.

Daihatsu’s recall affects cars only in Japan.

Including the latest actions, about 36 million vehicles have been recalled worldwide since 2008 over Takata inflators, according to Reuters estimates. That includes 19.6 million from Honda alone, some 8.2 million of which are in the United States, Honda spokeswoman Yuka Abe said.

Honda and Daihatsu said they aren’t aware of any injuries or deaths linked to the latest recalls.

Carmakers are calling back more cars after investigations showed that certain inflators were susceptible to moisture damage over time and possibly prone to rupture. Honda said it is acting based on the results of a study provide in March by Takata Corp., the Japanese supplier that has produced millions of airbag inflators that may explode, showering occupants with metal shards.

Mazda Motor Corp. said it was investigating whether the current findings warrant a similar recall of its vehicles. A Mitsubishi Motors Corp. spokesman said the company couldn’t comment on whether it plans a recall before officially notifying transportation authorities. A spokesperson for Subaru-maker Fuji Heavy Industries was not immediately available for comment.

That study, conducted independently by Takata, showed that moisture intrusion can cause the inflator’s propellant to lose density over time, raising the risk of rupture, Honda’s Abe said.

Honda said engineers have yet to determine the root cause of the problem.

Honda is acting in May, even though it received the study’s results in March, because it took time to determine how many cars were affected and where those cars were sold, Abe said.

Honda said it will replace the Takata-made driver-side inflators with inflators made by Autoliv and Daicel. Takata inflators on the passenger-side will be swapped for ones from Daicel and Takata. Abe said Honda opted to source from companies that can supply replacement quickly, and did not opt for Takata’s competitors because of concerns about Takata quality.

Daihatsu is replacing the Takata inflators with new inflators from Takata.

Toyota said Wednesday, while announcing its recall of about 5 million vehicles that it would opt for new inflators from Daicel on the driver-side because it could deliver the needed volume more quickly. Toyota will used Takata replacements for the passenger-side.

Toyota’s recall involved 35 models, including 1.36 million cars in Japan, 1.27 million in Europe, 637,000 in the U.S. and 18,000 in Canada, the company said in an email.

U.S. National Highway Traffic Safety Administration spokesman Gordon Trowbridge said Toyota and Nissan as well as Japanese government officials have been in contact with the U.S. safety agency over the last few days, and NHTSA will soon announce "significant new steps" related to accelerating Takata recalls.

Nissan said it was recalling about 1.56 million cars globally over the same issue, adding that no accidents or injuries had been reported. Nissan's recall includes 563,000 cars in Europe, 326,000 in North America, 288,000 in Japan and 274,000 in China.

In the U.S., the Nissan recall affects 12,725 units of the 2004 Pathfinder and about 251,000 Sentra compact cars from the 2004-06 model years from all 50 U.S. states. The company's latest move expands earlier recalls that were limited to regions with high humidity, a Nissan spokesman said.

Nissan will begin notifying customers in June, the spokesman said.

Six fatalities in Honda cars, including five in the U.S. and one in Malaysia, have been blamed on shrapnel from Takata airbags. At least 105 injuries are connected to the flaw, U.S. Senator Bill Nelson said last month.

Regulators in Japan and the U.S. are investigating Takata airbag inflators that may malfunction, deploying them with so much force that the part breaks and hurls metal shrapnel at the car's occupants.

A group of 10 automakers hired aerospace and defense company Orbital ATK to test potentially faulty Takata airbag inflators. The Japanese component maker has also commissioned German research group Fraunhofer Society to investigate the cause of airbag ruptures.

Takata, which has forecast a return to profit this fiscal year, has said it's unable to estimate the penalties from the lawsuits associated with the airbags and hasn't set aside any amount to cover them as the cause of the defect is still being investigated.

Ryan Beene 

Hans Greimel

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The Chinese are coming, but will the USA accept them, only time will tell.

How much does a Chinese brand need to discount its cars to make it in America? Wu Song, general manager of aspiring U.S. entrant Guangzhou Automobile Group Co., says he has that magic number: His cars have to be 30 percent cheaper.

The company's top executive already is on the prowl for U.S. dealers, importers and distributors. And if everything goes his way, Wu says he'll be testing his basement bargain pricing strategy with the U.S. launch of GAC Motor's GS4 crossover sometime in 2017.

"We are confident. It could be popular in the market," Wu told Automotive News at the Shanghai motor show. "Considering the low price, it should be competitive."

GAC is the latest China automaker to float plans to sell made-in-China cars in the U.S., following similar pronouncements by Great Wall and BYD. Skeptics often titter at such goals, noting the many Chinese brands that have pledged to be Stateside in two or three years. But GAC's disclosure shines a light on the pricing calculus they are working with.

With no true bargain brands left in the United States, Chinese brands see room to underprice the competition and gain a niche below rivals such as Kia, Mitsubishi and Dodge.

GAC's goal will be sticker prices that are 30 percent lower than competitors in the same segment, Wu said.

The GS4 represents the latest that GAC has to offer. On April 18, it was launched in China with prices ranging from 99,000 to 146,800 yuan ($16,200 to $24,100). GAC aims to sell 120,000 units a year.

In the United States, the compact crossover would go up against such entries as the Toyota RAV-4. Toyota's nameplate starts at $24,565 including shipping, just above the GS4's upper limit.

But Wu says his offering boasts better fuel efficiency, more power and a roomier interior. It consumes 6.3 liters per 100 kilometers under China's testing cycle, Wu said. While that can't be directly converted to an EPA rating, it equates to about 37 mpg. The RAV-4 gets a combined 26 miles per gallon.

"This car bears no relation to Toyota," Wu said. "Only the assembly technology is similar."

Wu said he is "90 percent confident" that GAC will bring the GS4 to the United States, but first the company needs to sign on dealers and importers. "The most important thing is finding a partner," he said.

It will be difficult for any unknown brand, no matter where it is from, to crack the U.S. market because it is saturated with so many established brands, said James Chao, managing director for Asia Pacific at IHS Automotive.

Meanwhile, a 30 percent "China discount" is smaller than the markdowns of up to 40 percent that China brands are already relegated to against global brands in their home market, he said.

"My initial reaction to the 30 percent is that it's way too small," Chao said. "I'm not optimistic. It's a real challenge for an unknown brand with an unknown track record."

Still, some U.S. dealers might roll the dice on the brand, possibly putting GAC's car up against used vehicles with a deep discount and warranty, Chao said.

A better U.S. entry strategy, he added, might be that of China's Zhejiang Geely Holding Group Co.

In 2010, Geely acquired Volvo Car Corp. and now plans to export a Chinese-made long-wheelbase version of the Volvo S60 sedan in the U.S. this year. Geely then might be able to steal into the U.S. market under Volvo's premium mantle, without going the cheap route, Chao said.

GAC has had its eye on the U.S. for awhile, with exhibits at the Detroit auto show in 2013 and 2015. This year, it showed the GS4 and an autonomous hybrid concept.

A major state-owned automaker, GAC operates manufacturing and sales joint ventures with Toyota Motor Corp., Honda Motor Co., Fiat Chrysler Automobiles and others.

In December, a company press said it "hopes to seek tie-up and cooperation with international counterparts at the Detroit auto show to fine-tune its production and research capabilities to make better energy-efficient cars in the future."

Hans Greimel

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Honda sees profits tumble by a third amongst a barrage of recalls in the last year.

Tepid sales and a barrage of recall costs hammered profits at Honda Motor Co. in the latest quarter, forcing the carmaker to miss its main targets for full-year earnings and unit sales.

Operating profit tumbled 32 percent to 111.94 billion yen ($935.7 million) in the January-March fiscal fourth quarter, from 165.29 billion yen ($1.38 billion) a year earlier.

Net income also fell, dropping 43 percent to 97.84 billion yen ($817.9 million), from 170.51 billion yen ($1.43 billion) the year before. Revenue advanced 8.3 percent to 3.35 trillion yen ($28.00 billion) in the quarter, while global sales inched ahead just 0.8 percent to 1.204 million vehicles, driven by North America and mainland Asia.

Earnings were hit by the lackluster sales volume and hefty costs for recalls as well as the ramp up of the HR-V crossover at Honda’s new factory in Mexico, Executive Vice President Tetsuo Iwamura said today while announcing the results at Honda’s global headquarters.

Iwamura did not break out the recall amount. But the costs, which cover Honda’s global call back of faulty airbags, were included as quality-related costs in 49.6 billion yen ($414.6 million) of selling, general and administrative expenses.

The potentially explosive airbags have been linked to five deaths in the U.S. and one in Malaysia. Worldwide, Honda has recalled some 14.4 million vehicles equipped with suspect airbag inflators made by Japanese supplier Takata Corp., more than any other automaker.

About 9.87 million of those recalls came in the United States.

Global sales were also dented last year when Honda delayed the launches of several new vehicles to double check quality, after its redesigned Fit Hybrid small car was recalled five times in one year to fix various drivetrain and computer control glitches.

In the Japanese home market, Honda’s sales plunged 22 percent to 221,000 vehicles in the quarter, as consumers stayed home after an increase in the nationwide sales tax. Sales in Europe slid 5.9 percent to 48,000 units. Volume in Asia rose 15 percent to 464,000 vehicles. That eclipsed the 397,000 sold in North America, which notched a 2.8 percent sales gain over the previous year.

North America, long Honda’s cash cow, slid to be being Honda’s third biggest profit engine in the fourth quarter, behind Asia and Japan. Regional operating income declined 72 percent to 11.6 billion yen ($97.0 million), hurt mainly by the Takata airbag recall costs.

Asia’s regional operating profit, meanwhile, surged 31 percent to 70.7 billion yen ($591.0 million) in the quarter.

Honda's European operations swung to an operating loss of 5.7 billion yen ($47.6 million) in the quarter, from an operating profit of 14.9 billion yen ($124.6 million) a year earlier. Honda said Europe was hit by falling sales and unfavorable foreign exchange rates, as well as a weakening model mix toward lower-margin vehicles.

Full-year retreat

For the full fiscal year ended March 31, overall operating profit slid 13 percent to 651.68 billion yen ($5.45 billion), from 750.28 billion yen ($6.27 billion) a year earlier.

Honda had predicted operating profit of 720.0 billion yen ($6.02 billion) as recently as January.

Annual net income declined 8.9 percent to 522.76 billion yen ($4.37 billion). That result was also lower than Honda’s earlier forecast for net income of 545.0 billion yen ($4.56 billion), an outlook that was twice revised downward last year as Honda’s sales sputtered and recall costs mounted.

Meanwhile, worldwide revenue rose 6.8 percent to 12.65 trillion yen ($105.74 billion), on a 0.9 percent increase in global sales to 4.364 million vehicles. Honda twice cut its sales initial forecast of 4.83 million vehicles. It lowered it to 4.62 million in October and bumped it down to 4.45 million in January. Its final full-year tally missed that target as well.

For the fiscal year, operating profit in North America fell 31 percent to 200.2 billion yen ($1.67 billion), making it the No. 2 profit center behind Asia. Regional operating profit in Asia, which includes China, India and Thailand, rose 28 percent to 277.9 billion yen ($2.32 billion). Europe's operating loss widened to 18.8 billion yen ($157.2 million), from 17.1 billion yen ($142.9 million) the year before.

Of the three big Japanese carmakers reporting so far this earnings season, Honda was alone in not achieving record profits. Mazda Motor Corp. and Mitsubishi Motors Corp., which reported last week, each notched record net and operating profits, on rising sales and foreign exchange gains.

But Mazda and Mitsubishi both expect profits to retreat in the current fiscal year ending March 31, 2016. In contrast, Honda predicts an increase sales and profits, but just barely.

Looking ahead, the carmaker expects sales to increase 6.7 percent to 4.655 million vehicles worldwide in the year to March 31, 2016. That is up from the 4.364 million it sold last fiscal year.

While delivering its earnings results, Honda announced it is switching to international financial reporting standards, or IFRS, from U.S. GAAP accounting standards.

Based on GAAP, Honda forecasts operating income to increase 1.3 percent to 660.0 billion yen ($5.52 billion) in the current fiscal year. Under IFRS, net is expected to advance 5.1 percent to 685.0 billion yen ($5.73 billion). Net income is expected to increase just 0.4 percent to 525.0 billion yen ($4.39 billion) under GAAP, the same level it would achieve when calculated according to IFRS.

Hans Greimel

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USA - Mitsubishi cancels plans for all new Sedan for the US, die to exchange rate issues.

Punishing foreign exchange rates have torpedoed plans to add a Korea-built midsize sedan to Mitsubishi Motors Corp.’s U.S. lineup. U.S. dealers had been banking on the sedan, sourced from a Renault-Nissan Alliance assembly plant in Busan, South Korea, since the plan was disclosed in November 2013.

But Mitsubishi pulled the plug last month, saying it ended the feasibility study after failing to reach a “win-win” outcome for the project. The main sticking point, according to one executive: The sudden appreciation of the Korean won against the dollar and Japanese yen made the car simply too expensive.

A spokesman said Mitsubishi is looking into other options for introducing a sedan to reinforce a lineup hurt by an aging Lancer compact sedan and the discontinuation of the larger Galant.

To be sure, the vagaries of foreign exchange rates and international trade underscore why the plan to source a car from Korea built by rival Renault-Nissan was always less than optimal.

The plan plugged a hole in Mitsubishi’s lineup and helped Renault-Nissan put underutilized capacity at its Korean plant to work. But if Mitsubishi wanted a new sedan to sell stateside, wouldn’t the natural first choice have been to source it from a Nissan Motor Corp. plant in North America?

The hitch: Nissan’s North American plants are bursting at the seams. And some of that output already is being shipped overseas, thanks to favorable exchange rates.

Indeed, just as Mitsubishi disclosed the breakdown in its sedan plans, Nissan trumpeted separately that it had shipped its one-millionth U.S.-built export. That car, made in Tennessee, was exported to Korea. Nissan exports the Leaf electric vehicle, the Altima sedan, the Pathfinder crossover and the Infiniti QX60 crossover to Korea.

Even the Korean brands try to limit shipments from Korea to the U.S., despite benefiting from a free-trade pact that eliminates U.S. tariffs. Hyundai-Kia Group imports only 38 percent of the vehicles it sells in the U.S.; the rest are built locally.

Mitsubishi could turn to its underused assembly plant in Normal, Ill. More than half of the Outlander Sport compact crossovers it makes there are exported. Facing few alternatives, executives may now be thinking of ways to turn Normal into an export base for a sedan it can sell in the U.S. as well as abroad. But it would be a tall order to retool the plant for a new vehicle that would likely have limited volume.

Mitsubishi’s U.S. sales rose 25 percent in 2014 to 77,643 units, largely on the Outlander Sport and the Mirage compact hatchback.

The brand, which is positioning SUVs and crossovers at the center of its revival, has been absent from the midsize sedan segment since dropping the Galant in 2012.

Hans Greimel

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Toyota edges out VW to take the #1 spot in 2014, long time holder GM moves to third.

Toyota Motor Corp. defended its crown as the world’s biggest automaker in 2014, selling 10.23 million vehicles to keep a slim lead over German rival Volkswagen Group.

But the Japanese giant also forecast sales to slump 1 percent to 10.15 million in the current calendar year, on the back of slowing demand in Japan and emerging markets.

It would be the first time sales have fallen since 2011, when Japanese automakers were broadsided by the killer Japanese earthquake and tsunami that derailed production and sales.

Another retreat could open the door for VW to steal the lead in 2015.

Toyota sales, including deliveries from its Daihatsu minicar subsidiary and Hino truckmaking affiliate, climbed 3 percent to 10.23 million vehicles in calendar year 2014, the company said today in a release. Volume exceeded 10 million units for the first time at Toyota.

The total edged the 10.14 million vehicles sold by VW, which also crossed the 10 million-unit mark for the first time in 2014. General Motors Co., the biggest U.S. automaker, finished third in last year’s sales race, with global volume rising 2 percent to 9.92 million vehicles.

Both Toyota and VW had forecast sales to exceed 10 million in 2014.

VW CEO Martin Winterkorn has been pursuing growth as part of a plan for the German automaker to become the world’s largest automaker by 2018. He had originally envisioned sales of 10 million units by then, but as shown by his company’s 2014 results, VW is far ahead of schedule.

Toyota has resumed its sales march after being thrown off pace in 2011 by the Japan earthquake-tsunami disaster that hit production hard for much of the year.

That year, GM edged Toyota to reclaim the top spot. GM had held the title for almost 80 years before Toyota moved ahead in 2008. Toyota led the world in 2008, 2009 and 2010. In 2012, the Japanese carmaker reclaimed the title from GM with sales of 9.75 million.

Last year, Toyota edged VW and GM with sales of 9.98 million.

Looking ahead, Toyota expects sales outside Japan to increase 2 percent to 8.06 million vehicles. But that will be offset by a 9 percent tumble in domestic sales to 2.1 million units.

The parent company expects home market volume to fall 7 percent to 1.45 million for its Toyota and Lexus passenger car brands. Daihatsu and Hino sales are also expected to fall.

The Japanese government raised the national consumption tax in 2014, crimping demand for big-ticket items such as cars. But tumbling oil prices are also sapping demand for fuel-efficient gasoline-electric vehicles, which account for a large portion of the Prius-maker’s sales.

Toyota forecast domestic production to fall 6 percent to 3.97 million vehicles in 2015. But globally, it expects output to advance 1 percent to 10.21 million, partly on robust U.S. demand.

Hans Greimel

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USA - Mitsubishi sees sales grow, and profits return in the USA

Mitsubishi Motors Corp., amid a remarkable sales rebound this year in the United States, is targeting its first profit in North America since the global financial crisis.

Now CEO Osamu Masuko pledges to build on the company's momentum with a badly needed injection of fresh product, starting with two possible new entries as early as next year.

The nameplates include the long-delayed Outlander PHEV plug-in hybrid crossover and a sedan version of the Mirage subcompact hatchback. After that, Mitsubishi plans to step up its electrification push with plug-in hybrid versions of the next-generation Outlander Sport and possibly the Montero SUV, Masuko told Automotive News.

Mitsubishi's beleaguered North American business is finally recovering from years of slumping sales and operating losses. In October, it increased its North American sales target to 116,000 vehicles for the current fiscal year, which ends March 31, 2015. That is up from an initial target of 109,000, and a 20 percent increase over the approximately 97,000 sold last fiscal year.

The company also forecasts a North American operating profit of ¥3 billion ($26 million) for the current fiscal year. Albeit meager, that result would be Mitsubishi's first North American operating profit since the fiscal year ended March 31, 2007. It also contrasts with the operating loss the automaker is predicting for this year in its home market of Japan.

"One of the important efforts inside the company has been turning North America from red ink to black," Masuko said. "Finally we can realize that."

He credited better-than-expected sales of the Outlander Sport compact crossover and Mirage hatchback, imported from Thailand, for helping dig Mitsubishi out of its North American hole.

Through October, U.S. sales have surged 30 percent to 64,564 vehicles, well ahead of the industrywide 6 percent gain. Sales of the Outlander Sport, Mitsubishi's best-selling nameplate, were up 25 percent to 25,620 vehicles, while the No. 2-selling Mirage notched volume of 14,240, against the 495 units sold when it was trickling into the U.S. last year.

"It's performing beyond expectations," Masuko said of the pint-sized Mirage. "There was a hike in volume, and it helped revitalize the dealers. It is contributing to our profit."

Small-car success

The success of the three-cylinder Mirage has emboldened Mitsubishi to consider following with its Thailand-built sedan version, sold as the Attrage and Mirage G4 overseas, Masuko said.

That sedan version could arrive in the second half of the next fiscal year, he said, meaning sometime between October 2015 and March 2016.

"It's not the case that we can't introduce small cars to the U.S. market. If the fuel economy is good, it will be accepted," Masuko said. The Mirage hatchback gets an EPA-rated combined 40 mpg.

"There is the possibility for small vehicles," he said. "That is why we are considering an introduction of the small sedan."

Mitsubishi will also bring the Outlander PHEV in that time frame. The launch of that crossover, already on sale in Europe and Japan, was delayed by a battery production bottleneck.

Battery capacity should increase to 60,000 units next year, up from 50,000 this year and 30,000 last, Masuko said. But battery supply could get tight again in the fiscal year ending March 31, 2017, when Mitsubishi introduces a plug-in hybrid version of the next-generation Outlander Sport, he said.

Mitsubishi plans to bring a plug-in and gasoline version of that vehicle to the U.S. A diesel drivetrain is also planned, but it is unclear what markets will get it.

Montero returns?

Rounding out the product push will likely be the full-size Montero SUV, sold as the Pajero in most overseas markets. Mitsubishi phased out the Montero from its U.S. lineup in 2008.

Mitsubishi previewed the next-generation Montero with its GC-PHEV concept shown at the 2013 Tokyo auto show. Mitsubishi plans to launch gasoline and plug-in versions of the next Montero sometime after April 1, 2016.

"We are putting our emphasis on SUVs in the United States," Masuko said. "So we have to think about introducing the next-generation Pajero to the United States. There's going to be a PHEV version. And we would like to introduce it."

Still up in the air: Mitsubishi's plans for a large sedan.

Mitsubishi and Renault SA have been in talks since November about Renault's supplying a midsize sedan to fill the hole in Mitsubishi's lineup left by the phased-out Galant.

Masuko says Mitsubishi is still weighing its options.

But one thing is certain, he added: Mitsubishi has no plans to follow Suzuki Motor Corp. in pulling out of the U.S.

"We are trying to introduce new vehicles," he said. "We aren't thinking of withdrawing whatsoever."

Hans Greimel

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More problems for Honda at its new Mexico plant, when will it ever end ?

Honda Motor Co.'s journey into Mexico has left it with a bout of indigestion.

The automaker's new $800 million plant in Celaya, about 160 miles northwest of Mexico City, has been struggling to meet demand amid problems caused by a green labor force, language barriers and a rail system prone to delays and occasional thefts, according to dealers who have discussed the matter with Honda officials.

Those challenges caused the plant's first product, the redesigned 2015 Fit subcompact -- which Honda was counting on to drive sales growth in the U.S. this year -- to stumble out of the gate two months late, with quality glitches and supply shortages showing up down the line.

Now, dealers say, the hitches have prompted Honda to push back the launch of Celaya's second product, the new HR-V, Honda's latest entry in the booming small-crossover segment. Dealers who had expected the car to arrive by the end of this year said they've been told that they will have to wait until the spring for shipments.

The troubles with the Fit and the plant are "such a departure from what we normally see when Honda starts a new plant in the U.S. or Canada," said Ron Harbour, a partner at consulting firm Oliver Wyman and an expert on auto plant efficiency. "What's happened is really un-Honda-like," he said.

The Fit launch has been uncharacteristically troublesome for Honda, which said it's re-examining its quality protocols worldwide. Last week, after the fifth recall in 12 months involving the redesigned model -- mostly affecting Japan-built Fits not sold in the U.S. -- Honda named a quality czar to oversee quality issues from r&d to market launch. Honda also said top executives would take pay cuts for three months to take responsibility for the car's troubles. The company said the added quality reviews could delay product launches, including the HR-V in Mexico.

Honda's bumpy road with its Mexico plant raises a warning flag for other automakers that are rushing to ramp up production in that country to take advantage of low labor costs, free-trade agreements with key export markets and insulation from fluctuations in the yen.

In addition to Honda, Nissan Motor Corp. and Mazda Motor Corp. have opened plants in the last 12 months. BMW AG, Volkswagen AG's Audi unit and Kia Motors Corp. also are building plants there.

Harbour, the auto production expert, said Mexico presents manufacturers with many challenges as well as advantages. With so many new plants springing up, finding enough skilled workers isn't easy, he said. And rail transportation can be a problem.

"Railcars do get hijacked," Harbour said. "You need to hire guards for the trains."

Honda dealers said they have had delays in Fit deliveries because the cars had to be repaired after parts were stolen from them while in transit in Mexico.

"As with shipments within the U.S. or from other plants, damage can occur during shipment," said Chris Martin, a Honda spokesman. Honda is "constantly evaluating the shipping processes to seek improvements," he added.

The Fit's troubles have been frustrating for U.S. dealers because they've seen strong consumer interest in the vehicle but haven't had enough inventory to deliver the cars customers are looking for.

"The Fit is going over really well with all age groups," said Greg May, owner of a Honda store in Waco, Texas. "You've got younger buyers coming in and people in their 50s and 60s who like the standard backup camera. But we can't get enough."

As of last week, May had just two Fits on his lot.

In particularly short supply, dealers said, are top EX-L trim-level Fits; models with navigation systems; and certain colors, such as yellow and blue. AutoNation Inc., the nation's largest dealership chain, operates 22 Honda stores, but its online inventory shows they collectively have just six Fits with navigation in stock.

George Rosenthal, a tech support specialist in Wheeling, Ill., said he put down a deposit and waited two and a half months for a Fit with a factory-installed navigation system before settling for one without.

Martin, the Honda spokesman, said Honda regrets "any inconvenience to our customers" who have had to wait to get Fits. He added that deliveries to dealers "improved dramatically through the summer" and pointed out that Fit sales had a record September -- with 6,628 cars sold, including some previous-generation models.

Even with the strong September, the Fit isn't helping Honda much. In the first nine months of the year, sales of the Fit are actually down 3 percent, at 39,618 cars. Honda brand sales have totaled 1.04 million cars and light trucks, up just 2,673 from a year earlier, while the overall market was up 6 percent.

Hans Greimel

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