Takata Hit With $200 Million Fine, Loses Honda As Biggest Client, Stops Using Ammonium Nitrate

November 4, 2015

After years of investigations and a confusing patchwork of recalls to replace its fatally flawed airbags, Takata has finally buckled.

The Japanese parts supplier has agreed to pay a $200 million fine, to redesign its airbags, and to recall all of those devices that use ammonium nitrate unless it can prove they're safe for consumers. It's part of a complicated arrangement with the National Highway Traffic Safety Administration in which Takata at long last accepted blame where blame was due:

"As part of NHTSA’s Consent Order to Takata, the company has admitted that it was aware of a defect but failed to issue a timely recall, a violation of the Motor Vehicle Safety Act. In connection with the Consent Order, NHTSA also issued findings that Takata provided NHTSA with selective, incomplete or inaccurate data dating back to at least 2009, and continuing through the agency’s current investigation, and that Takata also provided its customers with selective, incomplete or inaccurate data."

Here are the high points of the agreement:

  • Takata has been fined $200 million, $70 million of which is payable in cash. NHTSA says that the remaining $130 million will become due "if Takata fails to meet its commitments or if additional violations of the Safety Act are discovered". Based on Takata's checkered past, we wouldn't be surprised if NHTSA had to send out an invoice. 
  • Takata has also agreed to stop using ammonium nitrate to inflate its airbags. Though the company has been defiant in the face of criticism of its airbag design, all data collected suggests that Takata's ammonium nitrate destabilized over time, exploding with greater than expected force. Those explosions have been linked to seven deaths in the U.S., one in Malaysia, and scores of injuries.*
  • Perhaps most importantly, Takata has agreed to recall all airbag systems containing ammonium nitrate unless it can demonstrate to NHTSA that they're unquestionably safe for consumers (which isn't likely to happen).
  • Takata and the 12 automakers that used its airbags will coordinate those recalls based on risk to vehicle owners and passengers. Details are forthcoming, but given the long, unnecessarily complicated recall process that's rolled out over the past couple of years, we'd guess that vehicles in high-humidity states like those along the Gulf Coast will be bumped to the top of the list. That's because humidity appears to have been a major factor in destabilizing the ammonium nitrate in Takata's airbags.
  • To ensure that all of the above happens as planned and as scheduled, Takata will be subject to very close monitoring by NHTSA for the next five years. If the company fails to perform as the agreement specifies, Takata is $130 million poorer, and it could face additional disciplinary action. 

Meanwhile, Takata's biggest client, Honda, has stopped using the company's airbags. That's not because the airbags are inherently unsafe, though. It's because the folks at Honda believe Takata lied to them. According to a statement from the automaker:

"Over the past few months, Honda has reviewed millions of pages of Takata internal documents produced by Takata in relation to litigation regarding Takata airbag inflators. As a result of our review of these documents, we have become aware of evidence that suggests that Takata misrepresented and manipulated test data for certain airbag inflators. Honda expects its suppliers to act with integrity at all times and we are deeply troubled by this apparent behavior by one of our suppliers."

As the kids used to say: oh, snap.

Honda has been working with other suppliers for much of this year, and the company says that it will not use Takata devices on "new Honda and Acura models currently under development".

* Those explosions are different from the one that recently took place during testing of a 2016 Honda CR-V.

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