As Takata Reaches Settlement, Some Recall Issues are Still Worse Than Anticipated
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As Takata Reaches Settlement, Some Recall Issues are Still Worse Than Anticipated

Monday, April 23, 2018By Nina Shapirshteyn

Takata is ready to emerge from its Chapter 11 bankruptcy, but the fallout from the largest recall in history continues to haunt the Japanese airbag supplier. Takata has nearly completed its settlement with creditors, auto manufacturers, and injured drivers through various agreements. This includes the sale of its domestic operation to Key Safety Systems, an airbag supplier in Michigan, for approximately $1.6 billion.

As the settlement reaches its final stages, Ford has issued a warning to 30,000 owners of its 2006 Ranger pickups to cease using their cars. Recent data and additional testing revealed that the Takata airbag inflators that have already killed over 20 people were likely to explode and project metal shrapnel in the direction of passengers and drivers. The National Highway Traffic Safety Administration (NHTSA) confirmed that Ford Ranger pickup trucks were not safe to drive and present an imminent safety risk. The dangers posed by the defective airbags in the Ranger pickups are critical; in fact, dealers have been instructed to retrieve the trucks from owners’ homes and offer a loaner car at the expense of the car manufacturer. While many of these trucks have been subject to prior recalls, the current alert pertains only to 2006 model year Rangers. The latest warning demonstrates that the full effect of the Takata airbag scandal is yet to be realized.

Prior to its massive recall, Takata owned around 20% of the global airbag market. Takata’s airbags were outfitted with defective inflators, which sparked a decade long recall involving around 40 million cars in the United States. Many of these airbags have yet to be replaced. This continues to present dangers to millions of drivers and passengers in cars with Takata airbags.

Takata eventually pled guilty to criminal charges including improper reporting of the defect to car manufacturers such as Honda, Ford and Volkswagen, and wire fraud for producing fake data. The subsequent penalties amounted to approximately $1 billion to the Justice Department, $25 million to U.S. regulators and $850 million to automakers. Takata was also required to pay $125 million to victims who were injured or died as a result of defective airbags.

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