Takata Pegs Worst-Case Recall Costs at $24B
Takata is forecasting that in a worst-case scenario, recalling all of its faulty airbags will cost up to $24 billion.
This scenario involves Takata recalling 287.5 million airbag inflators, an insider told Bloomberg. Exactly how recall costs will be split between Takata and each automaker remains to be seen and will determine how much of the financial burden lands on the Japanese supplier.
Takata supplied faulty airbag inflators to over a dozen automotive manufacturers, which can explode with too much force and spray the occupants of the car with shrapnel.
The full amount of money for the recall is about four times more than Takata’s forecasted revenue for the year and is about six-times more than the company’s total assets as of the end of 2015.
SEE ALSO: Expanded Takata Airbag Recall Would ‘Needlessly Impose New Hardships’
The National Highway Traffic Safety Administration has blamed Takata airbags for nine fatalities in the U.S., and is currently investigating all of the brand’s inflators which use amonium nitrate as a propellant. The agency has now banned this propellant from being used in future models and has given Takata a deadline of 2019 to determine the root cause of the issues and to prove the inflators recently produced with the ammonium nitrate are safe.
Moisture seeping into the inflator has been blamed for the ruptures by Orbital ATK, an independent researcher hired by a coalition of automakers to find the issue.
[Source: Automotive News]
Stephen covers all of the day-to-day events of the industry as the News Editor at AutoGuide, along with being the AG truck expert. His truck knowledge comes from working long days on the woodlot with pickups and driving straight trucks professionally. When not at his desk, Steve can be found playing his bass or riding his snowmobile or Sea-Doo. Find Stephen on <A title="@Selmer07 on Twitter" href="http://www.twitter.com/selmer07">Twitter</A> and <A title="Stephen on Google+" href="http://plus.google.com/117833131531784822251?rel=author">Google+</A>
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