Takata Corp., the embattled airbag maker, ratcheted up its response to a global auto-safety crisis yesterday by publishing an open letter from its chief executive officer in U.S. and German newspapers. The advertisements in newspapers including the New York Times, The Wall Street Journal and Detroit Free Press show Takata is intensifying efforts to defend itself amid a crisis that caused its shares to fall more than 50 percent this year.
At least five driver deaths in the U.S. and Malaysia, and dozens of horrific injuries, have been reportedly linked to the faulty airbags. At least one victim’s death was initially investigated as a murder due to the grisly injuries. The problem is that there is a risk the airbags may deploy with excessive explosive power, sending potentially-fatal shrapnel around the interior of the automobile. Consequently, millions of vehicles produced by some of the world’s largest automakers, including Honda, Toyota and General Motors, have already been recalled due to the risk. The majority of the recalls are in the U.S. as the defective airbags were mostly made in Mexico.
The Takata letter is a response of sorts to heavy and continued criticism directed at Takata’s top executive for remaining largely silent on the issue, even though there are accusations that the company hid evidence of the defects for years.
“Even one failure is unacceptable and we are truly and deeply saddened that five fatalities have been attributed to auto accidents where Takata airbags malfunctioned,” Shigehisa Takada, Takata’s chairman and grandson of the company founder, wrote in the letter. “We understand the public’s concerns and we take them seriously.”
“I am personally committed to do what is necessary for Takata to regain the full confidence of the public and our customers,” Takada wrote.
The open letter follows Takada’s interview Wednesday with Japan’s Nikkei newspaper, in which he said Takata had been misunderstood and that the company has no intention of confronting the U.S. National Highway Traffic Safety Administration. The company has refused NHTSA’s demands to expand some recalls, which have been limited to high-humidity regions, nationwide. Nonetheless, the regulator said this week that it’s preparing for a legal battle.
To address the issue, Takata has said it will increase replacement airbag production to 450,000 repair kits by next month from its plant in Mexico. The company also will boost capacity to build the components at factories in China and Germany within a year, Takada told the Nikkei. Furthermore, Takata explained that it is additionally tripling capacity to test its airbag inflators.
In an interesting turn, Japanese carmakers announced earlier this week that they are considering the idea of introducing expiration dates for airbags, said Fumihiko Ike, chairman of Japan Automobile Manufacturers Association, at a press conference. There are concerns that Takata still does not know the root cause of the problem, so the suspicion now is that the problem has been caused by a gradual deterioration, rather than a manufacturing fault, says Ike, who is also the chairman of Honda Motor.
“I think the debate may as well occur eventually on whether [airbags] should be replaced after several years,” says Ike. “We have already started the talks unofficially.”
Aside from what eventually happens to Takata—and Honda which has been named with Takata in at least one lawsuit—there are questions that arise from all this. Most notably, if the Japan Automobile Manufacturers Association does start to seriously consider introducing airbags with expiration dates, what would happen to industry costs? Secondly, who would have to maintain the inventory of replacement airbags?
What are your thoughts on the whole issue?