Takata Hit With More Fines
Even as the supplier faces the prospect of new recalls, Takata could be in for a fine of as much as $200 million if it doesn’t follow up on demands laid out in a consent decree with the National Highway Traffic Safety Administration.
The company, whose faulty airbag inflators have been blamed for at least eight deaths and 98 injuries, will face an immediate $70 million in penalties. It will then be watched by an independent monitor and, if it doesn’t live up to several conditions – including a speed-up in its recall process – it could face another $130 million in deferred penalties.
The cost of the settlement could be dwarfed by legal fees and penalties from an ongoing Justice Department criminal investigation. Meanwhile, Honda, Takata’s largest customer, said it is severing ties with the supplier. Toyota recently sought out an alternative supplier for inflators it will use to repair faulty Takata airbags.
Even if Takata complies with the government’s consent decree, this would match the largest penalty ever handed down by NHTSA due to safety irregularities. Earlier this year, Fiat Chrysler Automobiles was hit with a $70 million penalty for failures linked to a number of separate recalls.
As part of its settlement, Takata acknowledged its failure to act in a timely manner, stating, "it was aware of a defect but failed to issue a timely recall," NHTSA announced. Takata still faces a criminal investigation and numerous lawsuits.
The issue revolves around airbag inflators used by a dozen auto manufacturers, including Toyota, Honda, General Motors, and BMW. For reasons that have yet to be determined, those devices can inflate over-aggressively, sending shrapnel flying into the passenger compartment. Along with the eight known deaths, injuries have ranged from cuts and bruises to a lost eye.
Takata’s problems may yet worsen. Those original recalls cover frontal airbags used in older vehicles. But federal investigators are now looking into reports that side impact airbags in newer vehicles are also malfunctioning.
One possible explanation is the volatile chemical used by Takata to power its inflators. As part of the consent decree, Takata will abandon ammonium nitrate and replace it with what critics hope will be a more stable material.