NTHSA Orders Further Recalls for Takata Air Bags

Posted by at 12:40 pm on May 5, 2016

The National Highway Traffic Safety Administration has ordered a dramatic expansion of the Takata airbag inflator recalls, more than doubling the number of hazardous parts covered by the callbacks in a move that the auto industry will spend the next several years sorting out.

Takata AirbagsNHTSA said in February it’s investigating all of the company’s inflators containing ammonium nitrate, the chemical propellant banned from future models.

“This is just another step in the long decline of Takata,” Jochen Siebert, managing director of JSC (Shanghai) Automotive Consulting Co., said before today’s announcement. “I just can’t see how Takata can survive this disaster.”

An expanded safety campaign deals a further blow to President Shigehisa Takada, who has so far failed to contain a spiraling crisis that’s wiped out 75 percent of his family company’s market value in the past year. Last May, the airbag supplier set the record for the largest automotive recall in U.S. history by agreeing to almost double the number of vehicles called back to about 34 million.

NHTSA said an additional 35 million to 40 million Takata-made inflators must now be replaced, on top of the nearly 29 million inflators already covered by the largest and most complex recall campaign in U.S. history.

Credit Suisse Group AG has estimated that a recall of 50 million vehicles would cost the company about 375 billion yen ($3.5 billion), more than the value of its net assets. The number may increase to 75 million if it was limited to airbags without drying agents, according to Credit Suisse in a March 30 note. Takata put the tab for a comprehensive callback — involving 287.5 million airbag inflators — at about 2.7 trillion yen, according to a person familiar with the matter back in March.

A researcher hired by a coalition of automakers said in February that moisture seeping into Takata’s inflators was determined to be the reason the airbags may rupture. Using a drying agent, or desiccant, in the propellant prevents moisture from destabilizing the compound.

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