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Takata facing massive bill for faulty air bags

Takata facing massive bill for faulty air bags
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Japanese car parts maker Takata is facing an implosion of its profits because of the growing recall of potentially deadly faulty air bag inflators.

Chief Executive Shigehisa Takada apologised to shareholders at the annual general meeting saying the company it is still tallying the costs of the problem.

By some calculations it could be facing a bill the equivalent of nearly 370 million euros for the recalls in the financial year that ends next March, leading to a net loss this year. That is based on the cost of replacement part prices and labour costs.

Inflators have had to be replaced on some 10.5 million vehicles over the past five years because of the risk of them spontaneously exploding in the faces of drivers and passengers.

At least two deaths are alleged to have been caused by the faulty air bags.

Takata, which is the world’s second-biggest vehicle safety parts maker, faced questions from shareholders at the AGM about potential losses and recall-related costs as well as its sluggish stock market performance.

Takata’s shares have fallen nearly 30 percent since the start of the year compared with a 6.0 percent drop in Tokyo’s benchmark Nikkei average.

In the latest move, General Motors has told its North American dealers not to sell an inventory of about 33,000 new and used Chevrolet Cruze cars from model years 2013 and 2014 because of potential problems with Takata air bags.

with Reuters