Coverage: Takata faces another huge recall

Japanese airbag maker Takata is expected to undergo another huge recall, with U.S. regulators expected to announce as early as Wednesday that 35 million additional airbags need to be recalled.

The company was forced last year to recall 34 million its airbags and was penalized with a $70 million fine.

Hiroko Tabuchi of The New York Times had the day’s news:

Regulators are expected to announce as early as Wednesday that at least 35 million additional airbags made by Takata will need to be fixed, according to a person briefed on the matter. This would more than double what is already the largest automotive recall in American history.

The airbags can unexpectedly explode, sending metal parts hurtling into the cabin. At least 11 deaths worldwide have been linked to the defect.

The expansion would bring the total of recalled Takata airbags to at least 63 million in the United States — possibly affecting nearly one in four of the 250 million vehicles on America’s roads.

At issue is Takata’s use of a compound called ammonium nitrate, which can become unstable over time or when it is exposed to moisture. Takata has wrestled with the makeup of the compound over the years, eventually adding a drying agent to make it more stable. The new recalls focus on airbags that do not have the drying agent.

Scott Upham, founder and chief executive of the automotive consulting firm Valient Market Research, said that the wider recall was an admission by Takata that its use of ammonium nitrate — a cheap, but potent, compound more often used at large-scale sites like coal mines — was a safety risk.

“Finally, there’s enough scientific evidence to point to the humidity issue as affecting the propellant,” Mr. Upham said. “For a long period of time, they denied that ammonium nitrate was to blame. But this does validate there are fundamental issues with the chemical itself.”

Mike Spector of The Wall Street Journal explained what led to this latest recall:

U.S. regulators concluded additional air-bag inflaters should be recalled after studying three separate probes conducted by Takata; a group of 10 auto makers; and Honda Motor Co., the manufacturer most affected by the problematic devices, respectively, one of the people said. A consent order Takata signed in November gives regulators broad authority to order the Japanese company to conduct additional recalls.

U.S. auto-safety regulators are “reviewing the findings of three separate investigations into the Takata air-bag ruptures,” a NHTSA spokesman said “The recall of Takata air-bag inflaters covered by the NHTSA Consent Order continues and the agency will take all appropriate actions to make sure air bags in Americans’ vehicles are safe.”

“Takata is working with regulators and our auto maker customers to develop long-term, orderly solutions to these important safety issues,” a spokesman for the Japanese company said. “We strongly urge all consumers to check NHTSA’s www.safercar.gov website and contact their dealers immediately if they discover their vehicle is subject to a recall.”

The swelling recalls are likely to increase financial pressure on Takata, which has suffered large stock declines and faced increased warranty costs amid the continuing safety crisis. The Japanese supplier earlier this week disclosed $189 million in additional financial losses for the year ended in March because of recall costs and settling legal claims from victims of air-bag ruptures.

Takata is in the midst of trying to sell an interiors division to raise cash and has enlisted prominent restructuring lawyers in the U.S. as recalls have mounted, The Wall Street Journal has reported.

The additional recalls don’t cover all air-bag inflaters employing ammonium nitrate currently on U.S. roads, which could prompt criticism from Capitol Hill lawmakers looking for regulators and Takata to take more aggressive actions. Some Senate Democrats long critical of regulators and Takata have called for all air-bag inflaters using ammonium nitrate to be recalled.

David Shepardson of Reuters detailed a previous recall the company endured:

Takata spokesman Jared Levy declined to confirm the expansion, but said the company is “working with regulators and our automaker customers to develop long-term, orderly solutions to these important safety issues.”

Last month, NHTSA said there were about 85 million unrecalled Takata air bag inflators in U.S. vehicles that would need to be recalled by 2019 unless the company can prove they are safe.

The recall expansion, earlier reported by The Wall Street Journal, leaves open the question of whether about 50 million inflators – including 18 million side inflators and about 32 million frontal and side airbags with drying agents – will eventually need to be recalled.

At least 11 people have been killed worldwide in incidents linked to defective Takata inflators. The latest was the March 31 death of a 17-year-old driver in Texas.

Under an agreement signed last year, the company has until 2019 to demonstrate that all of its unrecalled air bag inflators are safe.

The prospect of ballooning recall costs has prompted Takata to look for a financial backer.