Takata would stop making air-bag inflators after bankruptcy after recall

Any plan would require final approval from Takata's board before the air bag maker submits them as part of expected bankruptcy filings in the United States and Japan. The company's steering committee has recommended Key Safety Systems Inc., a US air-bag maker owned by China's Ningbo Joyson Electronic Corp., as the preferred bidder for the entire manufacturer. The company is nearing a takeover deal with rival Key Safety Systems Inc. that would be consummated as part of the bankruptcy proceedings, this person said, though an agreement hasn't yet been reached. Takata's liabilities are seen exceeding USD9bn following a huge massive global recall of airbags linked to deadly explosions.

A USA judge said earlier this year the costs of replacing all of the faulty Takata inflators could be $8 billion.

Above all Honda Motor, which as Takata's largest customer is one of the worst affected, have to recall their famous Accord and Civic models in 2008 because of the airbags.

Takata's exploding airbags have been blamed for at least 17 deaths worldwide. The automotive parts supplier is facing an $850 million payment to vehicle makers, as part of a settlement for a U.S. Justice Department criminal probe. On top of this, the company agreed to pay $125 million to a victims' compensation fund.

A federal grand jury in January indicted three former Takata executives for criminal wrongdoing in connection with the safety defect. The company has until early 2018 to pay $850-million owed to automakers, or within five days of securing a financial backer. Almost 16 million cars were involved. As far as airbag inflators are concerned, Takata has proven that it's not cut for this line of business.

Last month, four automakers including Toyota and BMW agreed to pay $553 million to settle a United States lawsuit over the airbags.

If the inevitable does happen, Takata will be remembered as the largest bankruptcy in Japan post-World War II history. Takata's bankruptcy was nearly a foregone conclusion, but the need to replace tens of millions of airbags remains. "That will be a daunting task", she continued.

"Replacing defective airbags is still the most important issue for manufacturers on the Takata front, and the most important issue for this story as a whole", Anand said.

  • Zachary Reyes