Takata crisis forces Daimler to take a €500-million hit image

Daimler said it would set aside around 500 million euros (561 million dollars) this year for some upcoming recalls over Takata’s faulty airbags.

Earlier this month, the US National Highway Traffic Safety Administration, alongside Takata, said the carmakers would have to recall another 35 million to 40 million inflators, in addition to the 28.8 million potentially faulty parts already called back. Following this massive safety campaign extension, the German carmaker Daimler said that it would have to recall around 200,000 cars by December 2019, but it wanted to specify that it was not aware of any cases of defect and the move is a precautionary one for the United States and Canada.

“Daimler will recognize a provision in the mid hundreds of million euros in the financial year 2016 in connection with the extended recall of airbags by the supplier Takata in the United States and Canada,” the company said in a statement. “The anticipated expense will not affect earnings from the ongoing business and will be reported separately. The negative impact on the cash flow caused by the recalls will be spread over the mentioned timeframe and will be minor for 2016.”

However, even if Daimler forecasts a slight rise in 2016 compared to group earnings from last year, it separately said its Truck division would be significantly hit this year, changing its outlook. “The world’s major truck markets are in a period of sustained contraction,” said the automaker, while it expects for the market to contract by 15 percent this year in the NAFTA region and by 20 percent in Brazil, where it intends to cut jobs that will result in 100 million euros (112 million dollars) of extra costs for voluntary severance packages.