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Japan-Update

Additional recall to drag out Takata's air bag woes

End of tunnel not in sight for troubled Japanese manufacturer

TOKYO -- Takata's recent findings that even air bags previously deemed safe could explode have expanded its already enormous recall in the U.S., further prolonging the Japanese manufacturer's troubles.

The National Highway Traffic Safety Administration said earlier this week that 2.7 million air bags Takata produced between 2005 and 2012 will be subject to recall, after testing by the company found that inflators using calcium sulfate as a desiccant, or drying agent, could rupture. 

Vehicles made by Ford Motor, Nissan Motor and Mazda Motor are equipped with the defective inflators. Japan's transport ministry has indicated that the inflators were used only in the U.S., so the recall will not broaden here.

Around 100 million air bags that do not contain desiccants have been covered by earlier worldwide recalls. Because there were no reports of desiccated inflators causing problems, they had been excluded from previous recalls, except in cases of manufacturing defects.

Takata began using another type of drying agent, zeolite, around 2008. These newer inflators are not included in the latest recall, because that propellant has not been confirmed to degrade over the years.

The cost burden to Japanese automakers of the latest recall is likely to be limited. Nissan, which will recall around 630,000 compacts in the U.S. and Canada, says the expenses are "being taken care of properly." Mazda will charge the costs to Ford, which builds its vehicles under an original equipment manufacturing arrangement.

But if Takata cannot prove the safety of desiccated air bags by the end of 2019 -- as demanded by the NHTSA -- the authorities may order the recall of all 100 million or so air bags containing drying agents. Experts contend that all propellants degrade over the years, so proving the safety of all desiccated inflators may be difficult.

Japan's Nakanishi Research Institute has estimated the cost of replacing non-desiccated inflators at around 1.6 trillion yen ($14.1 billion). The cost of replacing all desiccated inflators would be nearly 1.5 trillion yen.

Takata filed for bankruptcy protection last month. Automakers will charge the company the recall costs they have shouldered through the bankruptcy procedure. But with Takata's ability to repay limited, creditors only expect to receive a small percentage of their claims, even before the new recall comes into the picture. If the recall volume doubles, the cost burden on automakers, which would take on the bulk of related spending, will weigh heavily.

(Nikkei)

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