Airbags a matter of trust
Toyota has vowed to help pinpoint the cause of a defect in air bags used in more than 50 million vehicles worldwide, saying the auto industry risks losing the trust of car buyers if the problem drags on unresolved.
The air bags, made by Takata Corp. of Japan, can deploy with too much force, potentially causing injury or even death.
sg"Recalls are not just about technical problems. If there is a morsel of consumer doubt, then we have to deal with it," Toyota president, Akio Toyoda, told reporters on the sidelines of a reception on Thursday for the Japanese Automobile Manufacturers Association.
Takata has agreed to a broader recall that doubled the number of airbags needing repair in the US to 34 million. Toyota is one of 11 automakers recalling their vehicles.
Meanwhile, doubts are growing about whether the Japanese supplier has the financial muscle for such a large task. Producing enough replacement parts will take years.
The problem is with the airbags' inflators. A chemical inside can kick in with too much force, blowing apart the metal inflator and sending shards flying. The defect has caused at least six deaths and more than 100 injuries worldwide. Although exposure to moisture for extended periods appears to trigger the problem, the root cause is still unknown.
Japan auto officials stressed on Friday that each automaker has a stake in resolving the problem because of the potential dent in their reputation over safety concerns. And the automakers can't just dump Takata for another air bag supplier, because certain car models were designed with the Takata airbags in mind.
Takata expects production of replacement inflators to be ramped up to 1 million a month by September. Even so automakers, including Toyota and Honda, have been lining up other suppliers to make inflators. Honda is Takata's largest customer for airbags.
Overall, 11 automakers are conducting recalls. Toyota and other automakers such as BMW AG, Fiat Chrysler Automobiles N.V., Ford Motor Co. and General Motors Co. have hired Orbital ATK, an aerospace and defense technology company based in Dulles, Virgina, to conduct testing on Takata air bags. Some companies are separately doing their own testing, as is Takata and the US government.
Documents filed by Toyota with US safety regulators show that a recall of Takata driver-side airbags announced last week stemmed from tests on inflators in Toyota vehicles. Investigators found that a seal ring designed to keep moisture out had been twisted.
For now, old airbags are being replaced with newer ones, because, whatever the cause the explosions don't appear to happen until the air bags get older. This means the replacement airbags could also turn out to be defective, requiring another replacement, depending on what the tests eventually find.
The final financial hit for Takata will be determined only after the cause and a solution are identified. The company reported a 5 billion yen (US$41 million) extraordinary loss for the fiscal fourth quarter ended March 31, stemming from costs related to previously announced recalls.
Scott Upham, CEO of Valient Market Research in Rochester, New York, and a former Takata employee, estimates the huge recall will cost Takata US$4 billion to US$5 billion. Lawsuits could add another US$1 billion. Takata, he said, has been negotiating long-term payment plans with automakers.
Takata was fined US$1.2 million (145.7 million yen) by US regulators for failing to co-operate with an investigation. Other US civil penalties are still possible.
Toyoda, the Toyota president, was solemn when addressing Takata's woes on Thursday. Toyota went through a similar public-relations disaster over massive recalls which eventually reached 14 million vehicles worldwide. Those were for problems including faulty floor mats, defective brakes and sticky gas pedals.
"We must aggressively pursue recalls. Otherwise, we can't go forward," he said.