Takata files for bankruptcy after fatality-ridden airbag scandal
Cost-cutting by any means necessary isn't always the smartest decision.
After kick-starting the world's largest automotive recall, Takata has resigned to fate and filed for bankruptcy protection.
Takata has filed for bankruptcy protection in both Japan and the US. It will sell "substantially all" of its assets to Key Safety Systems, a supplier based out of Michigan.
For the price of $1.588 billion, Key Safety Systems will assume all assets and operations not related to Takata's ammonium-nitrate airbag inflators, the components at the heart of its scandal. That part of Takata will eventually be wound down, according to a statement from Key Safety Systems. "We are committed to ensuring that the restructuring process has as little impact as possible on our employees, customers and suppliers across the world, as well as on drivers whose safety is always our primary focus," said Shigehisa Takada, CEO of Takata, in a statement.
Shigehisa Takada, chairman and CEO of Takata, answers questions during a press conference in Tokyo on June 26, 2017.
Takata ended up in this mess after it decided to cut the cost of its airbag inflators by removing a moisture-absorbing desiccant. Moisture managed to make its way into the inflators, so when it came time to inflate an airbag, the inflator could rupture and instead shower the interior with shrapnel. To date, at least 16 deaths and 180 injuries were linked to these faulty airbag inflators.
What followed was a grand series of missteps, including withholding data and manipulating test results, resulting in Takata pleading guilty to wire fraud charges in the US. It agreed to pay a $1 billion criminal penalty, and it's been working to produce replacement parts ever since.
The specific number of faulty inflators is unknown, but since 2008, some 100 million inflators worldwide have been recalled. The recalls affect 19 different automakers, 17 of which are listed as unsecured creditors on its bankruptcy filing, including BMW, Honda and Toyota. Many of the automakers in question have moved to other suppliers for replacing the recalled components.
According to data from the independent monitor overseeing Takata's airbag inflator recall, approximately two-thirds of the 46.2 million recalled inflators are still in cars across the US. While parts haven't been the easiest to find, it's vital that owners communicate with their dealerships to ensure these parts are replaced as quickly as possible.