UPDATE: As anticipated, Takata Corp. filed for bankruptcy protection in Japan and Chapter 11 protection in the U.S. on Monday, June 26.
Honda, General Motors, Ford and nearly every other major automaker have recalled around 42 million vehicles in the U.S., making it the largest automotive recall in history. Faulty Takata air bag inflators, which can cause air bags to explode with shrapnel-like material, sparked a global recall spanning 100 million parts. The weight of the massive recall sent Takata into bankruptcy, a move that executives said was necessary to continue production of replacement parts.
Honda, which accounts for roughly half of the affected vehicles worldwide, has already booked charges amounting to $5 billion U.S. for its airbag recalls. Honda officials in Japan said the company had expected it would be difficult to secure compensation from Takata, according to Reuters. A spokesperson told other business news outlets that Honda has already accounted for what it believes to be the total cost of completing the recalls on its own.
GM said any material financial impact related to the Takata recalls would be reflected in its public financial reports. GM has estimated that it will cost $320 million to replace inflators in 2.5 million vehicles.
Ford has not issued any estimate of cost for repairing its vehicles but issued a statement saying “We are following NHTSA’s coordinated remedy to phase in vehicles by model, model years, and regions, over the next few years.”
Nissan issued a statement saying it’s “working as quickly as possible to ensure that affected owners can visit their dealer for corrective action as soon as possible. Nissan is working with alternative suppliers to make new inflators for a prompt rollout in future vehicles."
Key Safety Systems will reportedly pay $1.56B to acquire Takata's assets. "Key Safety Systems is the ideal sponsor as we address the costs related to airbag inflator recalls and an optimal partner to the company’s customers, suppliers and employees," said Shigehisa Takada, chairman and CEO of Takata. "The combined business would be well-positioned for long-term success in the global automotive industry."
The asset sale must still be approved through the bankruptcy process. In the U.S., the company filed its case in U.S. Bankruptcy Court in Wilmington, DE.
According to reporting by the Detroit News and USA Today, Key Safety Systems
- Was acquired last year by Chinese automotive conglomerate Ningbo Joyson Electronic for $920 million. The acquirer's three divisions are electronics and automation, automotive components and safety markets.
- Has 13,000 employees worldwide working at 32 plants and technical centers.
- Reported 2016 revenue of more than $1.8 billion.