Takata To Pay $70 Million In Fines Over Defective Air Bags
On Tuesday, Takata Corp., a Japan-based automotive parts supplier, and TK Holdings Inc., have signed a Consent Order Agreement with the National Highway Traffic Safety Administration in which the parent company and its subsidiary agreed to pay $70 million in civil penalty for the damages caused by its exploding airbags, which have been linked to more than 100 reported injuries and eight deaths.
With the signed consent order, TK Holdings is obliged to pay $70 million in six installments on or before October 2020. The Consent Order further stipulates that if TK Holdings fails to meet specified obligations, it can be held liable for $130 million more in penalties.
"We deeply regret the circumstances that led to this Consent Order. This settlement is an important step forward for Takata that will enable us to focus on rebuilding the trust of automakers, regulators and the driving public," says Shigehisa Takada, Takata's Chairman and CEO, in a press release. "We will comply with all aspects of the settlement and are committed to being part of the solution."
Moreover, the automotive parts maker agreed to have the NHTSA supervise its testing and replacement of the faulty air bags. The consent order also obliges Takata not only to stop manufacturing and selling the non-desiccated Phase Stabilized Ammonium Nitrate (PSAN) Takata inflators, but also to prohibit it from entering into new contracts to supply the specified air bags.
The exploding air bag was reported [pdf] to be caused by humid conditions.Takata and the NHTSA have previously laid out the recall process on an agreement signed last May 19, 2015. Out of the 19 million recalled vehicles from various automobile manufacturers that were fitted with the faulty air bags, 6 million are getting prioritized by the NHTSA. Age and location, based on the levels of humidity, are the primary factors that govern the recall priority.
Honda, a car manufacturer that had its units fitted with Takata's PSAN inflators, stated that it will not fit future Honda and Acura models with air bags from the Japan-based supplier. Almost 75 percent of the reported injuries and all of the eight reported casualties were on Honda units equipped with the "exploding" air bags.
Furthermore, Honda proceeded to review Takata's internal documents.
"As a result of our review of these documents, we have become aware of evidence that suggests that Takata misrepresented and manipulated test data for certain air bag inflators," says the car maker in a statement. "Honda expects its suppliers to act with integrity at all times and we are deeply troubled by this apparent behavior by one of our suppliers."
The number of affected vehicles are expected to increase after the NHTSA probe on Takata's other inflator models.
Photo: Adam Bartlett | Flickr