Takata files for bankruptcy as a result of exploding airbag scandal

The Takata airbag recall is one of the biggest automotive recalls in history. The company started producing airbag inflators in the late 1990s, and around the year 2000, Takata discovered some of their airbag inflators weren’t functioning properly, and even found some had erupted during tests.

The first recorded incident reportedly happened in May 2004 where a driver’s side bag ruptured in a Honda Accord. It was not until half a decade later that Honda recalled more than 500,000 airbags for the defect to be rectified, and regulators didn’t start investigations until June 2014.

Now, the scale of the issue has resulted in the Japanese manufacturer filing for bankruptcy.

What’s the problem?

The scandal surrounding the airbag rupturing has been a long-standing problem. The issue is that while drivers are in their vehicle, the airbag can explode on deployment, propelling sharp shrapnel in to the cockpit. As of June this year, the defect has reportedly caused 17 deaths and more than 180 injuries worldwide.

Tens of millions of recalls

It was not until 18^th May 2015 that the airbag manufacturer agreed to recall 32 million airbag inflators fitted in many brands, including BMW, Fiat Chrysler, Daimler, Ford, General Motors, Mazda, Mitsubishi, Nissan, Subaru and Toyota. A year later, the airbag manufacturer issued a further recall of 35 to 40 million inflators, resulting in one of the largest automotive recalls in history.

Penalties

In February this year, Takata pleaded guilty in criminal courts for fabricating test data to hide the airbag defect, and pleaded guilty to wire fraud by providing the false test data.

They were hit with a $1 billion (£764 million) penalty.

Chief Financial Officer of Takata, Yoichiro Nomura, expressed the company’s deep regret:

“…the actions of certain Takata employees to undermine the integrity of the company’s testing data and reporting to customers were deeply inappropriate.”

Mr Nomura confirmed that some employees knew of the defects as early as 2000, but failed to act upon the information.

Bankruptcy

The scandal has driven the airbag manufacturer to the brink of bankruptcy. After multiple settlement agreements and pledges to fix the defect of tens of millions of vehicles worldwide, it’d be amazing if the manufacturer were able to easily return to ‘business as usual’.

On 19^th June 2017, the manufacturer filed for bankruptcy and announced they would be taken over by Key Safety Systems Inc. (a Chinese investor) for 175 billion yen (£1.2 billion). The bankruptcy order listed the company’s liabilities as more than $10 billion (£7.6 billion).

There’s a worry that Takata may not be able to deliver all the fixes as money is wearing thin. According to NHTA’s statistics, as of 26^th May 2017, only 38% of the 43 million airbags were recalled in the U.S. In Japan, they’ve made more progress, as 73% of the 19 million airbags have been recalled.