Takata considers reduction of some operations image

Amid a spreading safety crisis, the Japanese auto supplier is considering cutting some of its global airbag operations, according to a local news agency.

Takata, which finds itself at the center of a massive recall crisis provoked by its faulty inflators, is considering to take some drastic actions to cut the costs, by trimming its global airbag operations. As part of the strategy, the automotive supplier explores the idea of consolidating production plants in Europe and reducing overseas staff, Kyodo News reported. The move would be part of a wider restructuring process, the report said. Bloomberg reported at the beginning of February that Takata wants to reorganize its structure and it is preparing to propose a plan in this direction to automakers in early May, sources revealed. The company could also sell some non-core businesses to raise money to pay for the cost of recalling about 50 million vehicles due to its defective airbags, which has caused at least 10 deaths so far, the new agency said.

Investigators are trying to identify the root cause of the defective airbags. If Takata, which has been criticized for the way it has handled the recalls, is found to be liable for the defect, it could leave the company with a recall bill already estimated at more than 3 billion dollars. Automakers including Honda Motor and Toyota Motor, which have to-date been paying for replacement airbags, could also take this as a cue to cut off financial lifelines to Takata. Despite the ongoing scandal, the supplier reported this month higher than expected revenues during the last three financial quarters. However, the company said it did not take into consideration the most recent massive recall campaigns that could cause a significant boost in expenses.

Via Reuters