Honda To Recall 2.5 Million Cars on Software Issue
DETROIT -- Honda will recall 2.49 million cars, small SUVs and minivans worldwide, including its popular Accord sedan, to repair a software problem that could damage the automatic transmission.

The recall includes 1.5 million vehicles in the United States, about 760,000 in China and 135,142 in Canada, the automaker said on Friday.

This week, Consumer Reports said it was not recommending the 2012 Honda Civic. This led some industry analysts to ask if that was a symptom of larger problems at the automaker.

The company has said it disagreed with the influential U.S. consumer advocate's assessment.

Chris Martin, Honda spokesman at the company's U.S. headquarters in California, said on Friday the recall was not a sign of deeper difficulties, but instead stemmed from "extremely unusual circumstances."

"The far majority of our consumers would never really encounter this," he said. "It's software programming. It's not a weakness in the transmission per se."

Jesse Toprak, an analyst with TrueCar.com, said Honda should easily recover from the massive recall.

"The actual problem and the potential consequences of it are really not significant," said Toprak. "It can affect the performance of your transmission only if you are stuck in mud or snow and you are rocking back and forth very quickly between gears, and the transmission software can't keep up and you can potentially damage the transmission."

He said that, after Toyota recalled more than 14 million vehicles worldwide starting in 2009, "automakers have been so paranoid" about explaining a recall.

Before the Toyota recalls, Toprak said automakers tried to hide recalls by fixing any problem with internal bulletins to auto dealer service departments.

Through July, Honda auto sales were down 2.6 percent in the U.S. market, in large part because of the supply crisis caused by the March earthquake and tsunami in Japan. Overall, U.S. auto industry sales were up 11 percent for the period.

The U.S. market is Honda's most important, accounting for a third of global sales and even more of earnings.

Honda was sixth in the U.S. auto market through July, down from fourth for all of 2010.

The company reported a profit of 22.58 billion yen ($292.5 million) for the June quarter, but is adding inventory and expecting a sales boost in the second half of 2011, just as the U.S. and global economy faces greater uncertainty.

Honda's U.S.-traded shares were up 1 percent at $36.65 in afternoon trading on the New York Stock Exchange, while the S&P 500 index .SPX rose 0.9 percent.

HONDA ACCORD

Globally, the recall affects four-cylinder Accord sedans for the model years 2005 to 2010.

The company is also recalling vehicles in parts of Europe, the Middle East, South America, Mexico and Puerto Rico. The recall did not affect vehicles sold in Honda's home Japan market.

No injuries or deaths have been reported from the problem, Martin said.

In the United States and Canada, the recall also includes the CR-V crossover for the model years 2007 to 2010, as well as the small Element SUV from 2005 to 2008.

In China, the recall is mainly of Accord models and includes more than 160,000 Odyssey minivans from 2005 to 2009 and about 4,000 Spirior cars, which are based on the European version of the Accord, for the 2010 model year.

SOFTWARE ISSUE

Without updating the software, the automatic transmission in these vehicles could be damaged if the driver quickly shifts between gears. That might cause the engine to stall or make it difficult to put the car into park.

Honda said the problems might arise if the transmission were quickly shifted between the reverse, neutral and drive positions. A driver might do this in an attempt to dislodge a vehicle in mud or snow.

The automatic transmission secondary shaft bearing could be damaged in this scenario.

An update to transmission control module software will ease the transition between gears and reduce the possibility of damage.

Honda will begin informing U.S. consumers at the end of August. It did not disclose the expected cost of the recall.

The software update will take about a half-hour, but U.S. customers might have to leave their cars at Honda dealerships for a longer period, Martin added.