Holden recall of 24,000 vehicles to fix faulty airbags to cost $4 million

Holden New Zealand anticipates a $4 million bill will accompany the voluntary recall of 24,000 vehicles with defective Takata airbags. Photo / Getty Images

Holden New Zealand anticipates a $4 million bill will accompany the voluntary recall of 24,000 vehicles with defective Takata airbags, which is separate to the government's compulsory order over the faulty safety devices last month.

The local unit of General Motors Co's voluntary recall was in response to an Australian government order in February after the Australian Competition and Consumer Commission found a design defect in the Takata airbags, Holden NZ said in its 2017 annual report lodged with the Companies Office.

Holden NZ planned to make the voluntary notice in April or May of the year and its early estimate was $4m. It made the recall announcement on March 15.

A spokeswoman said in an email the volume was roughly 24,000 units, with the work scheduled over several years as and when replacement parts became available.

"This is a voluntary action to give our customers reassurance," she said. "It isn't a compulsory action enforced by the NZ Government."

Commerce and Consumer Affairs Minister Kris Faafoi last month announced a compulsory recall of 50,000 vehicles with Alpha-type Takata airbags for suppliers to contact owners and replace the defective safety devices by December next year.

The Motor Industry Association had been lobbying for a compulsory order, with a voluntary recall in place since 2013 when it was discovered a global recall of Takata airbags could affect up to 450,000 vehicles in New Zealand and 100 million vehicles worldwide.

Holden NZ lifted profit 21 per cent to $18m in calendar 2017 on a 5.7 per cent increase in revenue to $605.5m, which the spokeswoman said was "driven by stronger sales of Isuzu trucks, which we distribute under licence".

MIA figures show 14,411 new Holden vehicles were registered in calendar 2017, up from 14,337 the year earlier, a 0.5 per cent increase, while Isuzu new registrations increased to 2,774 from 2,640, a 5.1 per cent gain.

Holden was the third most popular new vehicle registered in 2017 with 9 per cent of the market, and while it's kept its ranking so far this year, the 4,072 new vehicles registered in the four months through April amount to 8 per cent of the market.

Holden expects sales will remain strong in 2018, continuing a trend of record new car sales in recent years, although profit may come under pressure as competitors fight more aggressively for market share.

"We anticipate sales will continue to be strong. We have launched new car lines recently - Equinox SUV and the all-new Commodore - which are both being well received by NZ customers," the spokeswoman said.

"We also expect to continue to see significant margin pressure in a highly-competitive environment."

Holden NZ bought $436.9m of motor vehicles and parts from related entities in calendar 2017, amounting to about 79 per cent of its total cost of sales, compared to $421.8m, or 80 per cent a year earlier.

The local division paid a $6.9m dividend to its parent in September last year, having skipped paying a return to its shareholder in 2016.