Takata, the Japanese airbag supplier behind one of the largest auto recalls in history, has been fined $70 million and must end production of its ammonium-nitrate inflators within the next three years.
The U.S. Department of Transportation, the parent agency of the National Highway Traffic Safety Administration, announced up to $130 million in extra fines if Takata breaks conditions of a new consent order signed Tuesday. Unusually, Takata will pay the $70 million over the next five years, a surprising departure from the immediate cash payments the federal government required from General Motors and Honda for those companies’ violations of the Motor Vehicle Safety Act.
The $70 million is a follow-up from this past February, when NHTSA began fining Takata $14,000 per day for “selective, incomplete, or inaccurate information” it had requested in two special orders. Takata also failed to disclose the problems within five days of its own acknowledgment. These two violations were each set at the maximum $35 million allowed by law. As with settlements by Toyota and GM, Takata agreed to be monitored by the agency for five years, appoint a chief safety officer to its board, and set up an employee whistleblower system.
In light of the news, Honda—which first knew of the airbag defects in 2004 and issued the first recall in 2008—said it would drop Takata as an airbag supplier, citing “misrepresented and manipulated test data.” Honda has been Takata’s biggest customer for many years.
“ Honda is dropping Takata as an airbag supplier, citing ‘misrepresented and manipulated test data.’ ”
Takata must also stop producing all driver’s-side airbag inflators made with phase-stabilized ammonium nitrate manufactured without desiccant, a moisture-absorbing chemical, by the end of 2017. Takata has an extra year to eliminate the same compound installed in passenger-side and side-airbag inflators. NHTSA has found a greater risk of defects in Takata inflators without desiccant and so far is permitting ammonium-nitrate inflators with desiccant unless more ruptures emerge, according to the consent order. Takata also cannot sign new contracts with automakers for any of these inflator types, but it may still produce replacement parts for these current inflators.
That’s the main problem. Many recall repairs are using identical versions of the very propellant NHTSA seeks to outlaw, and on top of that, there aren’t enough new inflators to complete recalls until at least 2019. The company has up to four more years to prove that all of its airbag inflators are safe and to detail the root cause for the defect. To this point, the definitive cause—thought to be humidity and moisture intrusion that breaks down the wafers inside the propellant—has yet to be determined. The agency is directing the recall schedule for all 11 automakers, its first-ever such legal exercise, with requirements that car owners with the “highest-risk” inflators be able to repair their cars by March 2016.
In the U.S. alone, about 23 million defective Takata airbag inflators have been recalled across 19 million vehicles from 11 automakers since Honda first began repairs in 2008. It wasn’t until April 2013 that more automakers recalled defective Takata inflators, and by summer 2014, in the midst of a confusing and onerous investigation by yet more automakers and the federal government, the problem had swelled to its current state. At least seven people have died and a hundred more have been injured in the U.S. from these defective inflators, which during a crash can burst and shoot shrapnel through the airbag due to problems with the propellant.