Takata could agree to fines of $1 billion in the U.S.

December 30, 2016

Takata has been on a losing streak for the past couple of years, but new reports suggest that the beleaguered Japanese parts supplier could soon slide much, much deeper into the red.

Insiders say that within the next few weeks, the company may agree to pony up $1 billion to settle a criminal investigation brought by the U.S. Department of Justice.  

If the rumors prove true, they wouldn't be entirely surprising. The company's fatally flawed airbags began making headlines in 2014, and 2015 was a publicists' worst nightmare--until 2016 rolled around, that is.

The Takata recall is now the biggest in U.S. history. In May, millions of the company's inflators were added to the recall list, bringing the total number of U.S. vehicles needing repairs to 42 million. Unfortunately, millions more could be affected in the future. Given the huge number of vehicles involved in the recall and the shortage of parts required to fix those vehicles, wrapping up the recall could take years

Tragically, several more deaths were linked to the company's exploding airbag inflators this year, including one of the first to occur in a vehicle not made by Honda. As of today, 16 people have been killed by the devices, including 11 in the U.S. Hundreds more have been injured.

Financial fallout

The recalls alone are costing Takata untold sums of money, which has been a major factor in the company's ongoing financial crisis. But that's not the supplier's only problem: here in the U.S., Takata is also being investigated for criminal wrongdoing.

Specifically, the Department of Justice is trying to determine whether Takata misled regulators and the public about the safety of its airbags and whether the company hid important information from federal officials. (You'll recall that until recently, Takata insisted that its airbag inflators that use ammonium nitrate were totally safe, despite overwhelming evidence to the contrary.)

Now, Takata appears ready to settle its case with the DOJ. People familiar with the talks say that the company could agree to federal fines reaching $1 billion--a sum that doesn't include the $70 million that Takata has already promised to pay or the $130 million it could be forced to cough up if it doesn't meet its obligations to the National Highway Traffic Safety Administration.

There's no indication when we might receive official details about the settlement. However, sources report that Takata may try to bring the DOJ investigation to a close before president-elect Trump is sworn into office on January 20.

While there's no indication that Trump or members of his administration would handle the investigation any differently than it's been handled until now, chances are good that Takata doesn't want to risk derailing the progress it's made over the past several years.

Stay tuned.

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