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Takata Air Bag Recall Repercussions Continue to Plague Auto Industry

Takata Air Bag Recall Repercussions Continue to Plague Auto Industry

By Philly Murtha, July 17, 2017
Japan’s Takata Corp. continues to deal with repercussions from manufacturing defective air bags that have led to a rising number of injuries and deaths. Takata already has reached a settlement with the U.S. Department of Justice to set aside $125 million to compensate consumers and $850 million in restitution for automakers, according to media reports. However, what may be the biggest auto recall to date continues to expand and will likely continue through 2019, Bloomberg News reports.

During the past few years, regulators, including the National Highway Traffic Safety Administration (NHTSA), have extended the recall of Taketa air bags more than 20 times to include millions of air bags installed in 19 automakers’ vehicles—including Tesla and Ferrari.

As of this week, there have been 17 fatalities and 180 injuries linked to faulty Takata air bags installed in vehicles covering the 2002-2015 model years. Last week, the NHTSA expanded its global air bag recall to cover 69 million cars and 12 million inflators. The replacement of air bags is underway and 70% of replacement inflators are from rival suppliers, according to news reports.

Just last month, Takata Corp. filed for Chapter 11 bankruptcy protection in a Delaware court, listing liabilities of $10 billion to $50 billion, according to Reuters. The list of liability claims includes Honda Motor Co.—the largest user of these air bags—along with Toyota Motor Corp. Additionally, there are individuals who have filed class-action lawsuits against the 84-year-old supplier.

Although the company has agreed to be sold to Chinese-owned Key Safety Systems Inc. for $1.6 billion, the ongoing embroilment now includes an official group made up of people injured by the air bags, and those owners whose cars have lost value due to the recall and are seeking compensation from automakers.

The group’s official status means that Takata must provide it with funds to probe the various automakers’ liability. The group is separate from other committees made up of suppliers and vendors who are more concerned with how their future business will be affected. In the ongoing recall saga, most automakers suggest that it is unlikely that Taketa will compensate them for their cost burden.
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