U.S. Agency Won’t Consider Takata Impact in Recall Decisions

By Jeff Plungis | April 4, 2016

The chief U.S. auto safety agency says 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 will focus solely on safety, as it must under U.S. law, the agency said in a statement Thursday.

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, according to a person familiar with the matter, or four times more than Tokyo-based company’s annual revenue. The figure is about $7 billion more than Jefferies Group LLC estimated in a February report. Takata said in a statement it’s still investigating the root cause and can’t accurately project its final costs.

The shares fell 5.5 percent to 414 yen as of the midday break in Tokyo trading, cutting its market value to about $307 million. Takata has plunged 49 percent this year.

19 Million

Automakers including Honda Motor Co. have recalled more than 19 million vehicles equipped with Takata airbags, the largest 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. by rupturing and spraying plastic and metal shards at motorists. 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.

Moisture seeping into Takata’s inflators was determined to be the reason Takata airbags have ruptured by Orbital ATK, a researcher hired by a coalition of automakers that announced its findings last month. Challenges with determining root cause of the rupture issue have held back automakers and the supplier from deciding how the companies will divvy costs.

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