2016/05/30

A Bigger, Scarier Number Than Today's Recall Of 12M Vehicles With Takata Airbags

The largest and most complex recall campaign in the history of the U.S. auto industry is only just beginning, with eight carmakers on Friday recalling 12 million vehicles equipped with potentially dangerous airbags.

The affected vehicles represent just a fraction of the number of cars that will need to have their driver and front-passenger airbags repaired. As many as 69 million of the safety devices, manufactured by Japan’s Takata Corp., are being recalled because the airbag inflator can explode with too much force and spray metal shrapnel at passengers. So far, at least 13 deaths and more than 100 injuries worldwide have been linked to the defect.

On May 4, the National Highway Traffic Safety Administration dramatically expanded its recall of Takata-made inflators, adding as many as 40 million airbags to the 29 million that had already been recalled. The safety campaign is so massive that NHTSA had to prescribe a multi-year, multi-phased approach to try to get them all repaired by 2019.
Friday’s announcement by eight automakers is merely the first tranche of the first phase of that expanded recall. Another wave of affected vehicles will be announced next week. A total of 17 manufacturers are affected.

Older cars in warmer, humid climates are given priority because investigators found that age and exposure to moisture is a key risk factor for airbag malfunction. The recalled inflators use an ammonium nitrate propellant that lacks a chemical additive to prevent moisture absorption. “The science clearly shows that these inflators become unsafe over time, faster when exposed to humidity and variations of temperature,” according to NHTSA Administrator Mark Rosekind. Cars in cooler, drier climates will be recalled later.
The exact number of cars and trucks affected is still unclear, as automakers and regulators sort through vehicle identification numbers. Many of the newly recalled inflators are in passenger side airbags of cars that might already have been recalled for the driver’s airbag. To find out if your car is affected, go to SaferCar.gov.

Nonetheless, “the scope of the Takata airbag recall is nothing short of mind-boggling,” said Jack R. Nerad, executive editorial director at Kelley Blue Book. “The most frightening aspect of this is that many car owners will not get the message, and thus their vehicles will remain unfixed with possibly fatal results.”

Indeed, reaching consumers may well be even more challenging than ensuring replacement parts are available. Many of the affected vehicles are older models, dating as far back as the early 2000s, and likely have changed hands one or more times. Mailing a recall postcard to the original buyer may be a waste of time. Tracking used vehicles through motor vehicle registrations is also difficult because information isn’t always up to date. Even when a recall notice does reach the current owner, it’s often difficult to get people to follow through and get their car fixed, government and industry officials say.
“This issue is urgent,” said NHTSA Administrator Mark Rosekind earlier this month. “Vehicle owners who received notice that parts are available for their repair should take action to get their vehicle fixed immediately.”

As of May 20, dealers had replaced 8.4 million airbags, according to NHTSA
Meanwhile, Takata has hired an investment banker, Lazard LAZ-US +% Ltd., to craft a restructuring plan and has talked with several private equity firms, including KKR & Co., about a possible investment, the Wall Street Journal reported. Takata is in no shape to weather the billions of dollars in liabilities it likely faces. The company, which lost $121 million for the year ended in March, has only $523 million in cash.

Automakers will likely be asked to share the financial burden, which poses a dilemma. Although no automaker is eager to shoulder the bill for a supplier’s defect, they have an interest in keeping Takata in business because it supplies other parts, including seat belts, steering wheels, electronics and textiles, needed to keep factories pumping out cars.The largest and most complex recall campaign in the history of the U.S. auto industry is only just beginning, with eight carmakers on Friday recalling 12 million vehicles equipped with potentially dangerous airbags.

The affected vehicles represent just a fraction of the number of cars that will need to have their driver and front-passenger airbags repaired. As many as 69 million of the safety devices, manufactured by Japan’s Takata Corp., are being recalled because the airbag inflator can explode with too much force and spray metal shrapnel at passengers. So far, at least 13 deaths and more than 100 injuries worldwide have been linked to the defect.

On May 4, the National Highway Traffic Safety Administration dramatically expanded its recall of Takata-made inflators, adding as many as 40 million airbags to the 29 million that had already been recalled. The safety campaign is so massive that NHTSA had to prescribe a multi-year, multi-phased approach to try to get them all repaired by 2019.
Friday’s announcement by eight automakers is merely the first tranche of the first phase of that expanded recall. Another wave of affected vehicles will be announced next week. A total of 17 manufacturers are affected.

Older cars in warmer, humid climates are given priority because investigators found that age and exposure to moisture is a key risk factor for airbag malfunction. The recalled inflators use an ammonium nitrate propellant that lacks a chemical additive to prevent moisture absorption. “The science clearly shows that these inflators become unsafe over time, faster when exposed to humidity and variations of temperature,” according to NHTSA Administrator Mark Rosekind. Cars in cooler, drier climates will be recalled later.
The exact number of cars and trucks affected is still unclear, as automakers and regulators sort through vehicle identification numbers. Many of the newly recalled inflators are in passenger side airbags of cars that might already have been recalled for the driver’s airbag. To find out if your car is affected, go to SaferCar.gov.
Nonetheless, “the scope of the Takata airbag recall is nothing short of mind-boggling,” said Jack R. Nerad, executive editorial director at Kelley Blue Book. “The most frightening aspect of this is that many car owners will not get the message, and thus their vehicles will remain unfixed with possibly fatal results.”

Indeed, reaching consumers may well be even more challenging than ensuring replacement parts are available. Many of the affected vehicles are older models, dating as far back as the early 2000s, and likely have changed hands one or more times. Mailing a recall postcard to the original buyer may be a waste of time. Tracking used vehicles through motor vehicle registrations is also difficult because information isn’t always up to date. Even when a recall notice does reach the current owner, it’s often difficult to get people to follow through and get their car fixed, government and industry officials say.
“This issue is urgent,” said NHTSA Administrator Mark Rosekind earlier this month. “Vehicle owners who received notice that parts are available for their repair should take action to get their vehicle fixed immediately.”

As of May 20, dealers had replaced 8.4 million airbags, according to NHTSA
Meanwhile, Takata has hired an investment banker, Lazard LAZ-US +% Ltd., to craft a restructuring plan and has talked with several private equity firms, including KKR & Co., about a possible investment, the Wall Street Journal reported. Takata is in no shape to weather the billions of dollars in liabilities it likely faces. The company, which lost $121 million for the year ended in March, has only $523 million in cash.

Automakers will likely be asked to share the financial burden, which poses a dilemma. Although no automaker is eager to shoulder the bill for a supplier’s defect, they have an interest in keeping Takata in business because it supplies other parts, including seat belts, steering wheels, electronics and textiles, needed to keep factories pumping out cars.
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