One of the outstanding questions in the ongoing Takata airbag saga – how much will it cost the company – is getting an answer, but even that response is changing for the worse for the supplier because those losses are mounting.
The company announced a loss of 35 billion yen, or $306 million, during the quarter that ended Sept. 30. Takata executives further explained the company will lose 25 billion yen for the year, which ends March 2015, which equates to $218 million.
Takata, which has apologized for the problems, earlier recorded a special loss of 45 billion yen, or nearly $400 million, in its first quarter to handle the costs associated with the problem. In short, it’s taken about $700 million losses due to the problem. More importantly, it’s not likely to be the end of such charges.
The supplier is assuming it will pay all recall-related costs, Chief Financial Officer Yoichiro Nomura said. However, the idea has been floated that some of the automakers may share in those costs. Nomura declined to elaborate on the possibility.
The losses are directly attributable to the costs related to the recall of 16 million vehicles worldwide, and 7.8 million in the U.S. – for now – due to its faulty airbags. In humid conditions, the company’s igniters become volatile and detonate with such force that plastic and metal shrapnel may hit the passengers in the vehicle’s cabin.
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The problem has been attributable to four deaths, two in Honda cars, and at least four lawsuits in the U.S.
U.S. safety regulators as well as the Justice Department are investigating the supplier, which produces about 22% of the world’s airbags, to see if it and its customers should have done something sooner. Part of the investigation may result in a larger-scale recall in the U.S.
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Currently, the recall is in effect in just certain regions of the country, but advocacy groups and some lawmakers are pushing for an expansion of the action to encompass the entire country. They claim that the impacted vehicles are all over the country and that the conditions necessary to cause the danger can occur nearly anywhere.
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The company said it hasn’t created a fund or set aside money to handle the lawsuits, two of which are seeking class-action status. The two class-action suits have been filed in Florida and California.
Additionally, the supplier is being pressured by the U.S. safety officials to ramp up the production rate of its replacement parts, even suggesting the company work with its competitors, if necessary. Takata took advice to heart talking to TRW, Autoliv and others to see if something could be done. Those efforts are still ongoing.