Takata Corp, the second largest auto safety parts supplier in the world, has announced it would incur a loss of around 45 billion yen ($440 million) in the April-June quarter because of its airbag problems.
The parts maker has been plagued by massive recalls – with many automakers calling back the vehicles equipped with Takata produced airbag inflators because of increased risk of explosion. The faulty part can malfunction and send shrapnel and metal debris in the cabin. The 45 billion yen ($440 million) charge only relates to the latest set of recalls by automakers from Honda, Toyota to BMW, which in the April-June period recalled cars to address the potential problem.
The airbag inflator problem is not new, as until March 2013, Takata had a related charge of $300 million, a contributing factor to a record 21.1 billion yen net loss. The dip was triggered by automakers that recalled around 4 million cars globally equipped by the Japanese supplier. Also, the carmakers have recalled over the last half-decade at least 12 million cars in relation to the issue, some of them even twice, after the indented fix proved unreliable.
The Q2 charge could rise if the ongoing US NHTSA safety review concludes that more vehicles driving in high humidity areas are prone to the risk of the airbags exploding or if the automakers voluntarily decide to expand the recall beyond certain regions.