Air-bag maker Takata hit with US$70m fine over deadly fault

PUBLISHED : Wednesday, 04 November, 2015, 3:57pm
UPDATED : Wednesday, 04 November, 2015, 3:57pm

The top US road safety regulator has imposed a relatively modest US$70-million fine on air-bag supplier Takata Corp and ordered it to stop making inflators that use ammonium nitrate.

The National Highway Traffic Safety Administration on Tuesday cited the chemical as a factor in explosive air-bag ruptures that caused seven deaths and nearly 100 injuries in the United States.

NHTSA said millions of cars equipped with potentially defective Takata air bags may not be repaired until the end of 2019 because not enough replacement parts are available.

In an unusual move, Honda Motor Co said it was “deeply troubled” by evidence suggesting Takata “misrepresented and manipulated test data for certain air bag inflators”. Honda was Takata’s largest air-bag customer.

NHTSA, which is part of the US Department of Transportation, accused Takata of providing “selective, incomplete or inaccurate data” from 2009 to the present.

Takata said it was committed to phasing out the use of ammonium nitrate in its inflators by the end of 2018. Its American depositary receipts closed down more than 4 per cent.

In a briefing, US Transportation Secretary Anthony Foxx said NHTSA had “taken Takata from being in a kicking-and-screaming mode to being part of the solution.”

Honda said it provided NHTSA with information from “millions of pages of Takata internal documents” that the Japanese supplier produced in connection with US lawsuits.

The automaker said it had recalled 6.3 million U.S. vehicles and replaced inflators on more than 40 per cent of them. Honda also said it no longer would use Takata inflators in front airbags in its future vehicles.

Takata said it would pay the US$70 million fine in six installments through October 2020. NHTSA said another $130 million would be due if the company does not comply or if the agency uncovers additional violations of safety regulations.

The potential total fine of $200 million is more than the $130 million that NHTSA levied earlier this year on Fiat Chrysler Automobiles but is dwarfed by much higher penalties from other agencies. The US Environmental Protection Agency, for example, has said Volkswagen AG is potentially liable for billions of dollars in fines for installing illegal software on nearly 500,000 US diesel models since 2009.