Takata rejects U.S. senator's call for airbag victim fund

Bloomberg News story

TOKYO (July 10, 2015) — Takata Corp., the Japanese auto-parts maker at the center of a global safety crisis, rejected a U.S. senator's request to set up a fund that would compensate people injured or killed by its airbags.

The auto supplier notified U.S. Sen. Richard Blumenthal, D-Conn., of its decision after the lawmaker called for a fund similar to what General Motors Co. established last year for people killed or injured by defective ignition switches. Takata airbags so far have been linked to eight fatalities and 130 injuries.

“While we do not believe establishing a general compensation fund is warranted at this time, we will continue to assess our position as we focus on how best to address the needs of individuals affected by an inflator rupture,” Takata said in an emailed statement.

The decision risks opening Takata up to more criticism by U.S. legislators who have held four hearings in the past eight months to grill the company over faulty airbags behind what is expected to become the auto industry's biggest recall in history. The defective devices, which can rupture during deployment, continue to take a toll on customers such as Honda Motor Co., which expanded its recalls on Thursday to 24.5 million vehicles.

Takata, auto makers and the National Highway Traffic Safety Administration (NHTSA) are still investigating the root cause that explains why the airbag inflators are prone to break apart, spraying metal and plastic components at occupants. A Senate report released before Takata's latest U.S. hearing found that the company's employees knew of serious safety and quality control issues as early as 2001.

Honda recall

After the safety action July 9, Honda has now recalled more vehicles in each of the past three months than it sold all of last fiscal year.

The car maker, which owns 1.2 percent of Takata, is also increasingly recalling newer vehicles. While previous campaigns affected cars as far back as the 2001 model year, Thursday's recall involved vehicles made as recently as the 2011 model year.

Takata said in its letter to Sen. Blumenthal that the fund set up by GM provided benefits to victims who otherwise may have been unable to get them due to GM's 2009 bankruptcy. The U.S. auto maker had legal immunity from lawsuits related to accidents that occurred before the reorganization.

“We intend to give your suggestion further study, and we will let you know if our thinking on this subject changes,” Kevin Kennedy, Takata executive vice president for North America, wrote in the letter, a copy of which was provided by Sen. Blumenthal's representative. “As we review our options, we would be happy to confer with you and your staff to ensure that we take full account of your views and considerations regarding public safety.”

The New York Times reported on the letter sent by Takata on July 9.

This Bloomberg News report appeared on the website of Automotive News, a Detroit-based sister publication of Tire Business.