Takata files for bankruptcy

TAKATA, the Japanese manufacturer embroiled in a massive global recall over faulty airbags, has finally bowed to the inevitable and filed for bankruptcy.

According to court filings from Monday’s submission, the company plans to sell the majority of its assets to Detroit-based airbag manufacturer Key Safety Systems for USD$1.6 billion.

Key Safety System, itself owned by giant Chinese conglomerate Ningbo Joyson, emerged as the leading bidder, but will close down Takata’s airbag manufacturing division in 2020 when it completes the manufacturer of replacement inflators to comply with the terms of the 100 million-strong recall of faulty units that affects 32 car brands. Takata will continue to manufacture seatbelts, steering wheels and a host of other automotive componentry.

3

The Takata scandal first emerged when airbags on Hondas began injuring people with metal fragments in 2008. Since then, the company has clocked up what US analysts estimate to be between USD$10bn to USD$15bn dollars in liabilities from class action and individual lawsuits as well as fines levied against the company by federal bodies. Since 2008, at least 17 people have died as a result of faulty Takata airbag actuators and, at the last count, 184 were registered as injured.

In a televised press conference on Monday morning, Takata company CEO Shigehisa Takada apologised for the company’s failures and vowed to step down. Mark Wehner, Key Safety’s chief technical officer, has stressed that he wants continuity in the handover and there were no plans to lay off Takata employees or liquidate the technical centre in Shiga Prefecture, Japan.

On the face of it, spending $1.6bn acquiring one of the world’s most toxic brands might not seem immediately appealing, but the purchase makes good sense for Key Safety. The company will not assume Takata’s liabilities and will also be in pole position to supply Takata’s biggest customer, Honda.

Ron Fieldesen, Key Safety’s senior VP of sales and marketing also promised a new regional headquarters in Japan. “If there is a need for Japanese people to serve our Japanese customers, I’m sure management would ultimately do that,” he is on record as saying.

The combined Key Safety/Takata holdings would account for a 25 percent market share of the global airbag sales, ranking second to Sweden’s Autoliv (34 percent).

3

So, what does it mean for you? Will the recall process be affected?

No. The recalls will continue and the Takata plants will continue manufacturing the replacement airbag actuators. Rival airbag manufacturers have also stepped in to take advantage of the unexpected sales bonanza. Key Safety’s continuity plans for Takata lessens the chance of supplies drying up, as would have been the case if an asset-stripping bid had acquired the Japanese company.

Is Takata off the hook financially? What legal redress do I have?

That’s a tough one. The bankruptcy courts will put every obstacle possible in the way of new lawsuits being presented to Takata/Key. As a result, the car manufacturers will find themselves assuming the majority of the legal heat. Although the defective bags were manufactured by Takata, car makers nevertheless have a responsibility to sell a safe product. Winning punitive damages won’t be easy because the manufacturers will attempt to pass the blame to the now-defunct Takata legal entity.

How do I know if my car is affected?

Go to the government's product safety site and have a look. It’s populated mainly by Japanese manufacturers, but some BMW, Chrysler, Dodge, Ferrari, Ford and Jeep vehicles are on the list too.