Massive Takata Airbag Recall Results in $1B US Settlement

The shares of Takata, the airbag maker were especially on an up-move following a media report that suggested that the settlement between the company and the USA regulators over the deadly exploding airbags is seen in near future.

2000: Takata executives Shinichi Tanaka, Hideo Nakajima and Tsuneo Chikaraishi realize that the air bags can rupture but they don't inform automakers, according to an indictment unsealed Friday. All three had worked for Takata until around 2015 in the United States and Japan.

As part of the plea agreement, Takata is expected to pay a US$25 million criminal penalty.

Most of the restitution, $850 million, is for airbag recall and replacement costs incurred by auto manufacturers who were victims of Takata's fraud scheme. Those automakers, in turn, paid Takata more than $1 billion for tens of millions of faulty inflators, according to the court.

"Automotive suppliers who sell products that are supposed to protect consumers from injury or death must put safety ahead of profits", McQuade said.

Takata air bag inflators can explode with too much force, spewing metal shrapnel into drivers and passengers.

Despite this knowledge, the DOJ alleges that the executives, who all worked for the company in both the US and Japan, falsified the results and discarded damaging information.

A US -based spokesman for Takata did not have an immediate comment and said a statement would be issued later Friday.

In September 2016, reports revealed that Takata failed to inform USA regulators about an air bag rupture which occurred in 2003.

Reuters reported on Thursday that Takata was expected to plead guilty to criminal wrongdoing as part of a deal with the Justice Department.

In November 2015, the US National Highway Traffic Safety Administration imposed a record US$200 million civil fine against Takata for providing inadequate and inaccurate information to regulators about the defect. The initial recall of 34 million vehicles included BMW, Chrysler, Daimler Trucks, Ford, General Motors, Honda, Mazda, Mitsubishi, Nissan, Subaru and Toyota.

Unlike most other air bag makers, Takata's inflators use explosive ammonium nitrate to fill air bags in a crash. Even after inflator ruptures began in 2008, all three executives, among other Takata officials, continued to withhold test data from automakers.

  • Eleanor Harrison