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$189 Million to be Set Aside Due to Takata Recall

Kaitlynn Martin7 months ago

Automakers have had to recall 24 million U.S. vehicles due to dangers posed by faulty Takata-brand air bags.  Takata recently set aside $189 million in preparation for recall costs.

About Takata Recall Expansion

According to Bloomberg, Takata Corp. raised provisions for its air bag recalls; these involve more than a dozen auto manufacturers. The air bag company has lost more than half of its value this year.

A combined 20.1 billion yen (Japanese Currency), or 189 million in U.S. dollars, will be booked by the auto parts supplier.  16.6 billion of which was decided after the air bag recall costs were reviewed, with the remaining 3.5 billion yen related to consumer injury settlements.

The Takata scandal caused company shares to fall 9.2 percent to 373 yen at the close in Tokyo, which dropped its market capitalization to about 31 billion yen.

Nikkei newspaper reported that The National Highway Traffic Safety Administration has told carmakers that recalls will widen to all vehicles with air bags that lack a moisture-absorbing desiccant that keeps the devices from deteriorating. This involves more than 100 million vehicles worldwide.

Overview of the Takata Air bag Defect

  • Takata inflators can deploy too forcefully, causing it to rupture and spray plastic and metal shards.
  • Issue has resulted in at least 60 million air bag recalls worldwide.
  • Defective air bags have been linked to the deaths of 10 motorists in the U.S. as well as a Malaysian pregnant woman.
  • According to researcher hired by a coalition of automakers, moisture seeping into Takata’s inflators is determined to be the reason the air bags may rupture.
  • The National Highway Traffic Safety Administration (NHTSA) is urging owners of BMW, Chrysler, Dodge, Ford, General Motors, Honda, Mazda, Mitsubishi, Nissan, Subaru, and Toyota vehicles equipped with Takata air bags to heed recall notices and have their air bags replaced.
  • The companies do not know for sure how they will divvy costs, as the root cause has yet to be determined. 

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