Takata faces $200 million civil fine for air bag defects

Shigehisa Takada is the CEO of Takata suppliers. This order also specifies a schedule for recalling all Takata ammonium nitrate inflators now on the road unless the company can prove they are safe or can show it has determined why its inflators are prone to rupture.

Takata’s air bag inflators can spew shrapnel into drivers and passengers in a crash.

For now, Honda will stop equipping Honda and Acura vehicles with front driver and passenger Takata airbags and the automaker plans on replacing all recalled inflators with inflators produced by suppliers other than Takata.

A big issue for Honda is Takata not knowing the root cause of the airbag explosions.

By midday in Tokyo, Takata shares were down 23 percent at 914 yen.

“Honda has taken a significant hit from this”, said Christopher Richter, senior analyst at consultants CLSA.

Mitsubishi Motors’ decision to consider switching away from the component – at the heart of a global recall scandal – came a day after Takata’s biggest customer, Honda Motor Co, said it would no longer use the inflators. “For Honda, that’s a no”, he added.

In its statement, the US National Highway Traffic Safety Administration accused Takata of providing “selective, incomplete or inaccurate data” from 2009. The fine could raise to $200 million if the Japanese group fails to meet its commitments or if further violations are discovered. Around 40 million cars have been unofficially recalled worldwide since 2008 over Takata air bag inflators.

But Sen. Richard Blumenthal, D-Conn., a frequent NHTSA and Takata critic, said the $70 million fine seems like a slap on the wrist and should be larger. In the deal, Takata admitted that it knew the inflators were defective, but failed to recall them in a timely manner. This compound can explode under too much force or by being exposed to high humidity for an extended period of time, and it sprays fragments of metal inside vehicles. “We are accelerating Takata recalls to get safe air bags into American vehicles more quickly, ensuring that consumers at the greatest risk are protected, and addressing the long-term risk of Takata’s use of a suspect propellant”.

“Delay, misdirection and refusal to acknowledge the truth allowed a serious problem to become a massive crisis”, commented Anthony Foxx, transportation secretary.