Companies Drop Takata Amid Record Penalties Against the Manufacturer

Takata is one of the world’s largest manufacturers of airbags and other auto safety features. With confidence waning and safety concerns increasing, automobile manufacturers are thinking twice about using Takata airbags in their vehicles.

So far Nissan, Honda and Toyota have dropped Takata as their airbag supplier. Mitsubishi, Mazda and Subaru makers are also considering not using Takata airbags. Some car companies like Toyota have not completely ruled out purchasing Takata inflators as long as Takata changes the design.

The company’s faulty airbags are at the center of the nation’s largest auto recall after several instances in which the airbags exploded with extreme force and sent shards of metal throughout a vehicle. Eight deaths and more than 100 injuries are tied to the airbags.

Although Takata has been unable to identify the exact reason for the explosions, the ammonium nitrate inflator the company controversially uses in its product has been linked to the issue.

Legal Ramifications

Last week, U.S. safety regulators issued two consent orders to Takata to protect consumers from the company’s dangerous product.

The first issues a record civil penalty against Takata through a $200 million fine. The company must pay $70 million in cash and will be fined the additional $130 million if it fails to cooperate and fulfill its commitments. It also orders the manufacturer to stop using ammonium nitrate inflators in it airbags.

The second order imposes unprecedented oversight of the recall process. It requires that Takata cooperate with the 12 auto makers involved in the recalls by making sure that they have all replacement parts on hand by March 2016 so that all repairs can be completed by the end of 2019. Recalls will need to be addressed based on level of risk.