Takata Airbag Recalls Cost Company $30MFebruary 9, 2015
Last year’s rash of Takata airbag recall notices has led the company to book almost $30 million in additional special losses. The Takata airbag recall forced the troubled manufacturer to declare a much larger annual loss than previously stated. The losses stem from repair costs to millions of vehicles with the defective airbag systems, the costs of its legal team in its testimony before the U.S. Congress and federal safety agencies, and the expected rush of lawsuits from drivers and their families who were injured or killed by the faulty airbags.
Explosions, Deaths Force Takata Airbag Recalls
The Takata airbag recalls started late last year, when reports surfaced of drivers being injured from exploding airbags. At least six deaths have so far been attributed to metal and plastic shrapnel flying from the airbag assembly systems and lacerating drivers and front-seat passengers. Laboratory tests prompted by the Takata airbag recall showed that the chemical used to inflate the airbags can become highly volatile in humid conditions. The manufacturer issued a limited recall for car owners in humid climates, but many of the automakers that use the airbags issued nationwide safety recalls.
Takata Airbag Recalls Lead to Bigger Losses
The announcements surrounding the Takata airbag recalls have led to massive losses for the manufacturer. The company had previously announced that it expected to take losses of $213 million for the year. Last week, the company announced losses of $277 million over the first nine months of 2014 and expects to lose $264 million for the year. The company booked a total special loss of $452 million to cover the costs of the Takata airbag recall for the nine months from March to December. It had already recorded a special loss of $425.6 million from March to September, for a difference of $26.4 million.
Losses Included In Takata Airbag Recalls
The losses from the Takata airbag recall included voluntary repairs by the company’s automaker customers after the news broke about the design flaw. These automakers include Honda, Takata’s biggest customers, and other major Japanese manufacturers such as Mazda, Nissan, Subaru and Toyota. Ford, GM and Chrysler were among the American automakers to suffer from the Takata airbag recall, as well as German luxury car maker BMW. Nearly all of these automakers issued nationwide recalls for their vehicles with Takata airbag systems.
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