Economy

Troubled airbag manufacturer Takata files for bankruptcy

Troubled airbag manufacturer Takata files for bankruptcy”

Global transport authorities have ordered about 100 million inflators to be recalled, a process that has dragged on for almost a decade. He estimates a Takata asset sale will generate about $1.5 billion to $2 billion.

Three of them - Honda, Nissan and Toyota - who have been paying recall costs until now, told the BBC that while they would continue negotiating, they were not hopeful of getting the money back. Carfax, which sells vehicle history reports, also lets people check open recalls for free.

The company faces mounting liabilities from the estimated 100 million defective air bags that have to be replaced as a result of an unstable propellant that has caused the devices to shoot parts at vehicle occupants.

Only 38% of the 43 million airbag inflators under recall in the US had been repaired as of 26 May, according to data on the US Department of Transportation's national highway traffic safety administration (NHTSA) website.

Apart from the fatalities, they are also responsible for at least 180 injuries, and sparked the largest automotive recall in United States history. Mounting liabilities associated with the faulty airbags have forced Takata to seek a buyer that would see it through a costly restructuring process.

"At a board meeting on June 26, our company chose to begin procedures in filing for bankruptcy protection", Takata said in a statement after filing for Chapter 11 bankruptcy protection in the USA, with similar action taken in Japan.

The challenges for Takata's acquirer will be manifold. It faces a talent exodus and auto industry distrust.

The lead attorney for people suing the automakers said in a statement following the announcement that he doesn't expect the bankruptcy to affect the pending claims against the companies. As recently as last week it maintained the possibility of keeping the company in operation.

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Japanese air bag maker Takata Corp.

That settlement will speed the removal of faulty inflators from 15.8 million vehicles and compensate consumers for economic losses, Prieto said.

In the US, NHTSA has been coordinating the pace of recalls and the flow of parts under a legally-binding 2015 agreement with Takata and 19 companies.

The government says vehicles younger than six years old aren't now at risk of an air bag inflator rupture even if they're in a high humidity region, because it takes time for the ammonium nitrate to degrade.

"It's likely every automaker involved in this recall will have to subsidize the process because the value of Takata's assets isn't enough to cover the costs of this recall", said Karl Brauer, executive publisher of Kelley Blue Book and Autotrader.

Key said it will not cut any Takata jobs or close any of its facilities.

The first explosion happened to a Honda Accord in 2004 in Alabama and injured the driver. Their replacements contain a drying agent to absorb excess moisture created by high temperatures, an idea Takata has come up with as a solution for the exploding airbags. It has until the end of 2019 to prove to U.S. regulators that those airbags are safe.

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