Airbag crisis to spell demise for Takata? image

Besides being an industry observer or directly involved, chances were you wouldn’t have known that Japan’s Takata Corp is the world’s second biggest auto safety parts producer.

Unfortunately for them, the world now knows about their existence – and not for the top position they hold on the automotive safety parts segment – but rather for the ongoing problems with its manufacturing process for one life-saving item – the airbag.

Over the last five years, no less than 10.5 million cars were recalled by automakers – mostly Japanese – for problems related to the company’s airbags, with some cars (in Toyota’s case) even called back for a second time.

The Takata recall of airbags has entered the top five of biggest ever recalls – a distinction no company wants, and the ongoing problem has not been resolved – with the parts maker collaborating with US federal authorities and several automakers (not just Japanese) to investigate further issues with vehicles equipped with the Takata airbags. That means more recalls could be on their way – as GM just highlighted by stopping sales for 33,000 Cruze sedans equipped with the safety part supplied by the Japanese.

“There is the worry that the volume of transactions with vehicle makers could decline because of the recall,” said Koji Endo, an analyst at Advanced Research.

The parts maker could even hit the redline soon, as the recalls have brought in a $500 million charge and ultimately could post a net loss this year, for the second time in the last three years. The safety issues have also taken a toll on the company’s stock, with its shares falling 30% since the start of the year.

Via Reuters