Takata Airbag Recall – Update #4

The ongoing recall of airbags made by Takata has now reached over 53,000,000 cars worldwide. It is now the largest ever recall for the auto industry. Interesting, the faulty airbags were claimed to have been made in only one factory (in Mexico) yet when you think about a car having between 1 and 10 airbags each, that would mean that one factory would have to have produced potentially 300 million airbags. There is a reason why companies like Takata have factories on different continents – to share the workload and get the product to the closest customer quickly.

Many hands are not making light work of the investigation. Apart from a US Government department – the National Highway Traffic Safety Administration (NHTSA), Honda and Toyota have their own internal investigations going, Takata has employed the Germany based Fraunhofer Institute and many of the other affected manufacturers have contracted Orbital ATK to figure out what can be done to fix the problem.

This recall now suggests that the faulty components were used in several factories and that they need to research how to replace certain chemical components to ensure that they do not degrade – which was one of the original discussion points of the recall. The early research into the problem suggested that moisture was working its way into the airbag inflators and reacting with the degrading chemicals causing the airbag to have a higher explosion during an accident. The airbags were not being triggered without an impact starting the process. The investigators originally concentrated on the hot and humid conditions that the cars were operating in. Now this seems to have been expanded to other damp environments (northern US or Europe for example).

We might now be at a stage where an airbag becomes a consumable item like brake fluid or clutch plates meaning that they have to be replaced at regular intervals and they do not last the life of the vehicle.

The question no one seems to be asking is what do the other airbag manufacturers use for the explosive components? Are they the same as Takata or different? If they are different then why cannot Takata use those ingredients? If they are the same, do they suffer the same level of degradation that causes the recall problem? There are 4 other manufacturers: Diacel, Nippon Kayaku, TRW and Autoliv who will benefit from Takata’s problems – will they also be subject to scrutiny?

The car manufacturers now affected are primarily Japanese: Honda, Toyota, Nissan, Mazda, Mitsubishi, Daihatsu and Subaru with the Big Three also included: GM, Ford and Chrysler. From Europe it includes BMW and Daimler Trucks.

The costs for the clean up for Takata were originally estimated to be about US$1.6 billion, now estimates are growing to nearer US$5 billion, wiping out profits and this is causing the share price to become volatile as investors consider their positions.

It has also been estimated that the cost to replace an airbag is between US$100 and US$150 per bag – now consider that high end vehicles have up to 10 each and the cost becomes huge. To date those costs have been borne by both the vehicle manufacturer and Takata. Now after the recall was expanded, Takata is likely to have to cover the costs on their own because why would a manufacturer continue to pay when it was not their product that failed? Today Takata has the money to do this, however, they will still need to sell new product to keep the cash flowing. This is certainly going to affect their research into other safety devices and technology, giving their rivals a head start with the adoption of new products and it can be a sure bet that Takata’s reputation has been hit again – see my earlier posts on this issue starting from December last year:
– Airbag Recall
– Airbag Recall – Update on Progress for Resolution
– Takata Airbag Failure – February Update

So far only Honda has released a financial statement stating that the recall has affected their performance, however I would now expect all the manufacturers involved in the recall to comment about the costs in their upcoming annual reports.

Media Panic
In Australia, when the latest release came from the US, the Australian media grabbed it, assigned their most dramatic script writers to the story and pushed it out causing significant panic. They interviewed owners who didn’t know that this issue has been in existence for several years and instilled panic by asking them what it was like to drive a death trap. This was an example from news.com.au under a picture of a blown bag: “Life-threatening … Drivers must now decide whether to take the risk and drive their cars or — if they can afford it — park their recalled car until new airbags become available.”

This was totally unnecessary and sadly the journalists chose to write an article based on one press release without doing any research that would have shown the state of the situation being deaths from 0.0000001% of cars affected. If my eyesight is correct, that is a 10 millionth of 1% chance of death. Then factor in the chances of an accident and the number becomes so small you would need an microscope to see it!

The comments section of the news stories showed how the readers also read the article and believed that their cars were now “ticking time bombs” (another news.com.au headline) and that the manufacturers wouldn’t know where they lived.

Owner Ambivalence
To make the situation worse, owners are very ambivalent and ignorant until of course a journalist corners them in a car park and asks them about the recall. One Honda owner contacted by news.com.au readily admitted that they were told by Honda over a year ago to bring their car in for the recall and they chose not to. Now with the media panic, they have done so – why wait a whole year to get the fix?

In one case, reported by the Japan Times, Honda were sued by an owner of a 2003 Civic in the US after he had received an injury from the airbag during an accident in March of this year. Honda had sent three letters to the owner in September last year, January and March of this year. It appears that the final notification (sent several days after the accident) triggered the lawsuit. Under cross examination in court, the owner admitted that he had received the notifications but had ignored the first two and had not taken the car in to be fixed (which would have prevented the injury he received).

In another recent suit written up in the Orlando Sentinel, a man in Florida has claimed damages after he turned out of a junction into the path of an oncoming car and his airbag was deployed. He claims metal parts from the airbag ricocheted off the coffee cup he was holding (!!) and into his face. Could the accident have been avoided if he was paying attention to the road and not drinking coffee at the time?

It seems in the US especially, lawyers are encouraging people to start suits against the manufacturers for accidents that happened years ago, where there is no evidence that proves that the airbag was at fault. Lawyers have been quoted in the media suggesting that wrecked cars should be kept by their owners as proof. This can be difficult, especially where there is finance owed on the car or the authorities need the car for examination and even Takata themselves found themselves in a Catch-22 situation where they were told by the courts to retain recalled airbags but were also told by the NHTSA to test them for the recall issues. There are also lawsuits in the US for accidents in Asia that bear no relationship with the US!