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4-Traders Homepage  >  Equities  >  Tokyo  >  Toyota Motor Corp    7203   JP3633400001

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Automakers recall 12 million U.S. vehicles over Takata air bags

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05/27/2016 | 10:44pm CEST
Visitors walk past a logo of Takata Corp on its display at a showroom for vehicles in Tokyo, Japan

Eight automakers said on Friday they are recalling more than 12 million U.S. vehicles for defective Takata air bag inflators, widening the largest-ever auto safety effort to more passenger-side devices.

Honda Motor Co (>> Honda Motor Co Ltd) is recalling 4.5 million U.S. vehicles while Fiat Chrysler Automobiles NV (>> Fiat Chrysler Automobiles NV)<FCAU.N> is recalling 4.3 million, according to the documents. The new recall is focussed on passenger-side air bag inflators, while prior recalls were for all frontal inflators.

Takata declared 14 million inflators defective in the first phase of its latest recall, and the Friday notice is included in that total.

Under U.S. government pressure, Japan's Takata Corp (>> Takata Corporation) this month agreed to declare as many as 40 million additional air bag inflators defective by 2019 in a move that will involve recalls by 17 automakers.

Takata inflators can explode with too much force and spray metal shrapnel into vehicle passenger compartments.

The defective air bag inflators have been linked to at least 13 deaths and more than 100 injuries worldwide. The vehicles being recalled were built between 2002 and 2011 and include pickups, SUVs and cars.

Separately, Takata is in bailout talks with a number of potential investors including private equity firm KKR & Co (>> KKR & Co. L.P.), a source told Reuters on Thursday.

Takata and the automakers say there are no reports of any ruptures involving the vehicles in the latest recall. They are prioritised by the car's age and the risk of exposure to high humidity. As a result, some owners may not get replacement inflators for several years.

Automakers worldwide had previously recalled about 50 million vehicles with Takata inflators.

Japan's transport ministry said Friday that automakers will recall approximately 7 million vehicles there, so the total worldwide is approaching 70 million.

Other automakers will issue notices in the coming days.

Before Friday, 14 automakers led by Honda had recalled 28.8 million inflators affecting 24 million U.S. vehicles.

At least 2.3 million of the 12 million vehicles in the latest recall were subject to previous driver side recalls.

Toyota Motor Corp (>> Toyota Motor Corp) told regulators it is recalling 1.65 million vehicles while Subaru (>> Fuji Heavy Industries Ltd) is recalling nearly 400,000 vehicles in the United States.

The two automakers said they include some discontinued Saab and Pontiac vehicles assembled for General Motors Co (>> General Motors Company).

Fiat Chrysler said Friday it is also recalling 933,000 vehicles sold outside the United States for Takata inflators. It told the U.S. National Highway Traffic Safety Administration (NHTSA) that the second phase of the Takata expansion would include 660,000 additional U.S. vehicles.

The new recalls are the result of increasingly aggressive U.S. auto safety regulators. The issue gained new traction after the March 31 death of an 17-year-old high school student in Texas in a moderate crash in her 2002 Honda Civic that police said would have been survivable without the defective air bag.

NHTSA Administrator Mark Rosekind said the latest recall "ensures the inflators will be recalled and replaced before they become dangerous, giving vehicle owners sufficient time to have them replaced before they pose a danger."

Mazda Motor Corp (>> Mazda Motor Corp) is recalling 730,000 U.S. vehicles while Nissan Motor Co (>> Nissan Motor Co Ltd) is recalling 400,000.

Mitsubishi Motors Corp (>> MITSUBISHI MOTORS CORPORATION) is recalling 38,000 vehicles and Ferrari NV <RACE.MI> is calling back 2,800 U.S. sports cars.

Automakers face challenges obtaining enough replacement parts and getting owners to repair their cars. Through May 20, just 8.5 million inflators have been replaced.

Takata may face still more vehicle recalls.

Under a November agreement with NHTSA, it agreed to phase out the volatile chemical ammonium nitrate used in the recalled inflators.

Takata could be required by 2019 to recall another 50 million U.S. inflators with ammonium nitrate unless Takata can prove they are safe under the NHTSA agreement.

In November, Takata agreed to pay a $70 million fine for safety violations and NHTSA named a former federal prosecutor as an independent monitor to oversee the massive recalls.

The embattled Japanese supplier faces an ongoing U.S. criminal investigation as well as class-action lawsuits and suits filed by the state of Hawaii and the U.S. Virgin Islands.

(Editing by Jeffrey Benkoe and Bernard Orr)

By David Shepardson

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