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Thursday, November 20, 2014

U.S. Seeks Nationwide Recall of All Vehicles Using Takata Air Bags

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U.S. Seeks Nationwide Recall of All
Vehicles Using Takata Air Bags

Click Here To See CSPAN Video Hearing On This Air Bag Issue

U.S. auto safety regulators, two days ahead of another round of congressional hearings, called for recalls of millions of additional air bags by Japanese supplier Takata Corp. and several big auto makers.

Click Here To Look-up Recalls by VIN (Vehicle Identification Number)

The move follows weeks of discussions between the National Highway Traffic Safety Administration, Takata and auto makers over a patchwork of regional recalls that are a part of 7.8 million vehicles that have been recalled in the U.S. over the last two years.

Acting NHTSA Administrator David Friedman said the demand, issued in phone calls to Takata on Monday, comes after the agency learned of a new incident occurring outside the original recall areas. The expanded recall would cover driverside air bags in five auto makers’ vehicles installed before 2008.

Takata had said it was unwilling to make a national recall, Mr. Friedman said. The agency can’t easily order a recall but can fine companies for failing to acknowledge and respond to safety problems. He said the recall would cover millions of vehicles, but the agency couldn’t specify an exact number.

“We are following the data where it takes us,” Mr. Friedman said. “If Takata and the auto makers fail to expand the recall we will make them do so. We have the ability to fine them and take whatever other action at our disposal under the law.”

A Takata spokesman said the company was concerned that a national recall could potentially divert replacement air bags from where they are needed.


“Takata is prepared to move forward with an appropriate expansion of the recalls should the scientific analysis and evaluation as conducted by Takata and NHTSA indicate a risk to safety beyond the current scope of the field actions,” said the spokesman, Alby Berman.

NHTSA is adding pressure on Takata and auto makers at a time when its ability to handle myriad safety concerns is being questioned. Earlier this year, the agency came under fire for its mishandling of General Motors Co. ’s troubled ignition-switch recall.

Several auto makers with vehicles involved in the limited Takata recalls, including Honda Motor Co. , said they are looking into NHTSA’s demand and would cooperate. Chrysler Group LLC said it “will continue to work with NHTSA to resolve this matter.” Ford Motor Co. said it would “take the appropriate action as expeditiously as we can.” The expanded recall also includes vehicles made by Mazda Motor Corp. and BMW AG . Mazda said it had no immediate comment. Representatives for BMW were unavailable for comment.

Ford and Chrysler had previously limited repairs to Florida, Hawaii, Puerto Rico and the U.S. Virgin Islands.

A newly disclosed incident that occurred in North Carolina—outside the regional recalls—prompted NHTSA to demand a nationwide recall, Mr. Friedman said. According to a complaint on the agency’s website, a 2007 Ford Mustang was involved in a crash in which the air bag deployed with too much force sending a metal fragment into the driver’s leg. The complaint says the incident occurred in August and the driver required medical attention.

Ford said it is investigating the incident.

Tuesday’s move elevates what had been a patchwork of regional recalls by Takata and 10 auto makers over the past few months. Their recalls have been confined to hot and humid states from Puerto Rico to Hawaii, and territories including the U.S. Virgin Islands and Guam.

Takata’s global chief of quality and vice presidents from Chrysler and Honda are slated to testify on Thursday in a hearing before the Senate Committee on Commerce, Science and Transportation.

Separately, NHTSA issued a special order to Takata compelling it to provide documents and detailed information on the propellant used in Takata’s inflaters. The company has publicly said it changed the chemical mix of the propellant in newly designed inflaters. As part of its continuing investigation, the agency will analyze the information received to determine if the chemical composition of Takata’s propellant mix may be a cause and or a contributing factor in the air bag inflater ruptures.

U.S. Sen. Claire McCaskill (D., Mo.) said, “Tuesday’s announcement was overdue but welcome and it’s my hope that Takata and the other auto makers that haven’t yet done so will quickly agree to NHTSA’s request.”

TOKYO—Pressure is mounting on the Japanese maker of air bags at the center of an escalating recall crisis after it balked at a demand from U.S. regulators to call back millions more vehicles.

The demand by the U.S. National Highway Traffic Safety Administration could mean hundreds of millions of dollars in additional costs for Tokyo-based Takata Corp. , whose air bags have been linked to at least five deaths after they exploded upon inflation, shooting out metal shards.

Takata objected to the agency’s call, saying an expanded action could slow delivery of parts to those regions with high humidity and temperature, which it considers as high-priority because most incidents incurred there.

Meanwhile, a senior Takata quality executive is set to testify before the U.S. Congress on Thursday. He is expected to face questions on why recalls have dragged out for six years, involving more vehicles.

Takata has hired a high-powered New York defense lawyer, Andrew Levander, to deal with a criminal investigation into its actions. Mr. Levander, a former U.S. prosecutor, has represented Jon Corzine , the banker and former U.S. senator, in litigation over the collapse of brokerage firm MF Global, as well as outside directors of Lehman Brothers following its 2008 bankruptcy petition.

The moves suggest a rocky road ahead for Takata, an 81-year-old maker of safety equipment for cars, whose air bags have already been the subject of recalls of more than 16 million vehicles from 10 auto makers since 2008.

NHTSA’s call for a nationwide recall would expand what is now a limited recall of cars with certain driver’s-side Takata air bags in some hot and humid regions. 

The regulator’s stance is a shift from October, when it said there was no need for a national recall if there was no evidence of wider risk. On Tuesday, the regulator said an incident in North Carolina in August provided that evidence.

Some analysts assume that the cost to replace air bag inflaters is around $100 a car.

Analysts say that even if NHTSA’s additional recalls are implemented, Takata has ample cash reserves and won’t be at immediate financial risk. But they also say it is hard to quantify potentially bigger risks, such as costs stemming from class-action suits, damage to Takata’s reputation or the possibility of yet more recalls. Securities firm SMBC Nikko recently suspended coverage of Takata, while other analysts have shied away from commenting on the company.

Takata’s stock price, which is off 63% this year, declined a further 7% in Tokyo on Wednesday.

“We understand that we can’t build trust in a single day but we will do our best to regain trust,” said Takata spokesman Hideyuki Matsumoto. He said the company couldn’t put a price tag on a nationwide recall since “we have not received an official explanation from NHTSA and we don’t know where and by how many vehicles the recalls could expand.”


To date, Takata has declined to say whether recall-related costs would be divided between it and auto makers and if so, what that ratio would be. An individual knowledgeable about Honda Motor Co. , Takata’s biggest customer whose cars comprise more than half of the vehicles recalled to date, said that in general, suppliers pay for the parts while auto makers pay for labor needed for replacements.

Takata’s most high-profile chance to explain itself in public will come Thursday, when 61-year-old Hiroshi Shimizu, the company’s senior vice president in charge of quality issues, testifies before the Senate Committee on Commerce, Science and Transportation.

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 Mr. Shimizu has spent half of his 36-year Takata career in the U.S., involved in air bag and seat belt production and sales operations, and is expected to speak through an interpreter, according to Toyohiro Hishikawa, a Takata spokesman.

Also expected to testify are Rick Schostek, an executive vice president for Honda North America; Scott Kunselman, a Chrysler senior vice president; and David Friedman, NHTSA’s acting administrator.

 An air bag rupture victim from Florida who was injured in an accident also is scheduled to testify before the senate hearing.


Takata said in mid-September that it planned to manufacture 1.5 million air bag inflater replacement kits by February, according to a document it filed to NHTSA, a fraction of the millions of vehicles for which it has to replace inflaters.

 The company plans to start operating two new production lines at its inflater plant in Monclova, Mexico, in January, spokesman Alby Berman said.

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