Takata would stop making air-bag inflators after bankruptcy after recall
- Author: Terrell Bush Jun 17, 2017,
Jun 17, 2017, 7:36
Following the news, Takata stock was for the time being suspended on the Tokyo stock exchange. Reports said Takata faces billions of dollars in liabilities over the recall.
A person briefed on the matter told Reuters Key was expected to acquire Takata assets as part of a restructuring in bankruptcy. USA vehicle safety regulators are putting pressure on Takata and automakers to speed up the replacement of defective inflators in the United States.
Crisis-hit airbag supplier Takata is near to bankruptcy according to reports in Japan.
The Nikkei business daily reports a new company will be created under Key, which will purchase Takata operations for about $1.6-billion, and will continue supplying airbags, seat belts, and other products, leaving liabilities behind in a separate entity. Takata airbag inflators have been found responsible for 16 deaths and and more than 180 injuries worldwide. "Takata's bankruptcy was nearly a foregone conclusion, but the need to replace tens of millions of airbags remains", said Karl Brauer, executive publisher for Autotrader and Kelley Blue Book. Michigan-based Key, owned by Chinese supplier Ningbo Joyson, did not immediately respond to a request for comment.
Earlier this year an American judge said the costs of replacing all of the faulty Takata inflators could be $8 billion. The settlement includes a $25 million criminal fine, $125 million in victim compensation and $850 million to compensate automakers who have suffered losses from massive recalls.
Takata agreed in February to pay $1 billion in penalties to the Justice Department and plead guilty to wire fraud.
Takata is expected to file for bankruptcy before selling its production operations to a newly formed company to pay off its debts to creditors, according to Nikkei. Almost 16 million cars were involved. It's likely that process will continue throughout Takata's bankruptcy proceedings and will take years to complete.
Automobile industry analysts say the number of vehicle recalls prompted by faulty Takata air bags would eventually exceed 100 million units globally.
Takata airbag inflators came under controversy when it was found that they explode with excessive force, causing metal and plastic shrapnel to go haywire inside the vehicle, therefore injuring occupants.