Takata agrees to recall another 35 million to 40 million air bag inflators
The recall of air bag inflators from Takata Corp., already the largest automotive recall in American history, more than doubled in size Wednesday.
The vast expansion is expected to send hordes of drivers into dealerships to fix their cars and threatens to stress automakers already dealing with upset customers.
The U.S. National Highway Traffic Safety Administration said that an additional 35 million to 40 million inflators from the Japanese auto parts company will be recalled, adding to the 28.8 million inflators already slated to be replaced.
The recalls will take place in five phases beginning this month and ending in December 2019, the agency said. The order in which recall notices will be sent will be determined by risk level.
The danger of the Takata inflators comes from the use of ammonium nitrate, a chemical that inflates air bags upon impact. But the chemical can degrade over time, especially when exposed to high humidity and fluctuating temperatures; in a crash, it can explode with too much force, rupturing the air bag and shooting shrapnel into drivers and passengers.
“The science clearly shows that these inflators become unsafe over time,” Mark Rosekind, administrator of NHTSA, said in a statement Wednesday. “This recall schedule ensures the inflators will be recalled and replaced before they become dangerous.”
In the U.S., at least 10 people have died and 100 have been injured in accidents tied to Takata inflators. In Malaysia, authorities said recently that they were looking into two deaths connected to ruptured Takata air bags.
The widening recall could have profound effects in coming years on the automotive parts industry and a wide swath of carmakers dealing with millions of recalls, experts said.
“This is really unprecedented,” said Scott Upham, chief executive of auto industry research firm Valient Market Research. “This is the largest recall in history in terms of the quantity of cars affected.”
Among carmakers, Honda could feel the biggest blow to its bottom line, Upham said, because all but one of the U.S. deaths occurred in Honda vehicles (Ford Motor Co. said one death due to a Takata air bag occurred in one of its vehicles).
That could test the loyalty of drivers who may connect the faulty air bags in their minds with the Honda brand, Upham said.
“Most Honda owners are very loyal and they tend to buy Honda after Honda after Honda,” he said. “What we are seeing for the first time are cracks in the armor of that loyalty because of this issue.”
Upham estimates that 10% to 15% of Honda drivers may end up defecting to other brands. The customers most up for grabs, he said, are those drivers who like to shop around and aren’t fervent Honda fans.
“That’s what they are really concerned about — is this going to have a long-term impact on their corporate reputation?” Upham said. “I think it will.”
At the Honda of Hollywood dealership Wednesday, Kathleen Kim, 48, said the recalls made her nervous about the safety of Honda cars in general. The freelance editor from Hollywood sometimes drives a Honda Element owned by a friend who often is out of town. Last year, Kim said she took the car into the dealership to fix the recalled air bag.
“It’s kind of shocking, the idea that you are driving around in a car that could potentially decapitate you,” she said. “And there’s no apology.”
For Honda and other carmakers, there is also the cost of repairing all those vehicles, as well as putting drivers into rental cars while waiting for parts to be manufactured (although not all car manufacturers are offering rentals).
“You have to go to the dealership to install the bag, and in most cases it’s about an hour for each vehicle,” said Pam Oakes, author of “Car Care for the Clueless.” “You add all these man hours up — that’s a lot of money.”
Honda and Takata are facing a class-action lawsuit that alleges that millions of drivers overpaid for cars with faulty air bags and that the resale value of the vehicles has dipped because of the recalls. Both companies have settled other lawsuits related to Takata air bag deaths.
For Takata, the huge scandal over its air bags could ultimately force the company into filing for bankruptcy protection, experts said. Already, carmakers such as Honda, Toyota and Nissan have said they will no longer use key parts made by Takata in its vehicles.
Last year, Takata owned about 22% of the worldwide market for air bag inflators, Upham said. He predicts that share to drop to 5% by 2020. The other air bag components that Takata could continue to sell, such as the actual bag itself, are commodity items with slim profit margins, he said.
“It’s almost like falling off a cliff,” Upham said. “Many carmakers have disavowed using their air bag products in the future.”
For now, Takata is facing the huge task of manufacturing enough replacement parts to fulfill the millions of recalls.
Even before the new recalls, Takata had already reached out to other auto parts makers such as Daicel and Autoliv to help make replacement inflators. But only about 900,000 new inflators are being produced each month, Oakes said.
