U.S. regulators won't consider Takata finances in recall decisions

WASHINGTON (April 1, 2016) — The chief U.S. auto-safety agency said it won't take Takata Corp.'s financial viability into account when it decides whether to expand further the largest-ever auto-safety recall.

The National Highway Traffic Safety Administration (NHTSA) will focus solely on safety, as it must under U.S. law, the agency said in a statement March 31.

NHTSA is reviewing the findings of three investigations into Takata's airbag ruptures while the recalls are under way, it said. Those probes attempted to determine the root cause of the airbag failures, and the review could be the basis for future decisions related to the recalls.

“NHTSA makes recall determinations based on safety, and safety alone,” agency spokesman Bryan Thomas said in the statement. “The agency will take all appropriate actions to make sure airbags in Americans' vehicles are safe.”

Takata's costs could add up to $24 billion — or four times more than the Tokyo-based company's annual revenue — according to a person familiar with the matter, Bloomberg News reported March 30. Jefferies Group L.L.C. had estimated $7 billion costs in a February report.

Takata said in a statement it's still investigating the root cause and can't accurately project its final costs.

19 million

Auto makers including Honda Motor Co. have recalled more than 19 million vehicles equipped with Takata airbags, the largest overall automotive safety recall in U.S. history. The airbag inflators can explode, sending shrapnel into the passenger compartment. More than 7.5 million inflators have been replaced, including 5.4 million by Honda, according to the agency.

NHTSA has said Takata airbag inflators have caused nine fatalities in the U.S. The regulator is investigating all Takata inflators that use a chemical propellant that's been banned from future models and is giving the company until as long as the end of 2019 to determine the root cause of the flaw or prove the inflators are safe.

The reason Takata airbags have ruptured is moisture seeping into Takata's inflators, according to Orbital ATK, a researcher hired by a coalition of auto makers that announced its findings last month. Challenges with determining root cause of the rupture issue have held back auto makers and the supplier from deciding how the companies will divvy costs.

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